Oil surges 8% as US rig count plunges, shorts cover

Oil prices rocketed more than 8 percent higher on Friday, their biggest one-day gain in two and a half years, after data showed US drillers were slamming the brakes on the shale drilling boom.

In a rally that may spur speculation that a seven-month price collapse has ended, global benchmark Brent crude shot up to more than USD 53, its highest in more than three weeks, after Baker Hughes data showed the number of rigs drilling for oil in the United States fell by 94 - or 7 percent - this week.

Two weeks of relatively stable oil prices have helped shift sentiment after months of decline, setting the stage for the violent rebound on Friday afternoon. Short traders raced to cover their positions on fears that the rout was nearing its end.

Some "short covering was expected and the rig count number sparked the rally late," said Phil Flynn, analyst at Price Futures Group in Chicago.

The rig count drop was the most since 1987. With drillers having idled about 24 percent of their oil drilling rigs since the summer, some traders may be betting that an anticipated slowdown in US oil production is nearer than expected.

US oil futures rose by USD 3.71, or 8.3 percent, to settle at USD 48.24 a barrel, soaring by nearly USD 3 in the final frenzied hour or so of trade.