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U.S. crude up over 4 percent on scramble to cover shorts

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Reuters NEW YORK
Last Updated : Aug 28 2015 | 9:28 PM IST

By Barani Krishnan

NEW YORK (Reuters) - The short-covering frenzy in global oil markets extended for a second straight day on Friday, pushing U.S. crude up as much as 5 percent in morning trade, getting extra support from a rally in gasoline futures, before both began consolidating.

Combined with Thursday's jump, U.S. crude has gained more than 14 percent over just two sessions, which if sustained would be the biggest two-day rise since early 2009. It was also headed for its first positive week since mid-June.

"A severely oversold and shorted oil market is creating a bid for covering in U.S. crude," said Chris Jarvis, analyst at Caprock Risk Management in Frederick, Maryland.

U.S. crude's front-month was up $1.90, or 4.4 percent, at $44.46 a barrel by 11:00 a.m. EDT (1500 GMT).

Brent, the global benchmark, rose $1.75, or 3.8 percent, to $49.31.

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Gasoline rose 3 percent after Phillips 66 unexpectedly shut down a 150,000-barrel-per-day fluid catalytic cracker at its 238,000 bpd refinery in Linden, New Jersey, due to a leak.

Some analysts also attributed U.S. crude's strength to concerns that Tropical Storm Erika was headed towards oil and gas installations in the U.S. Gulf, as noted on the U.S. National Hurricane Center website.

(Additional reporting by Christopher Johnson in London and Meeyoung Cho and Aaron Sheldrick in Seoul; Editing by Alden Bentley)

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First Published: Aug 28 2015 | 9:16 PM IST

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