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US crude jumped six per cent on Friday as a rally in gasoline prices and air raids in Yemen prompted traders to scramble for a second day to cover short positions, while market players also kept an eye on a storm that appeared to be approaching the oil-rich US Gulf.
US crude has gained about 16 per cent over two sessions, headed for its first weekly rise since mid-June. If the day's gains stick, it would be the second largest two-day rise in 25 years.
"A severely oversold and shorted oil market is creating a bid for covering in US crude," said Chris Jarvis, analyst at Caprock Risk Management in Frederick, Maryland.
US crude's front-month was up $2.60, or 6.1 per cent, at $45.16 a barrel by 11:38 am EDT (1538 GMT). It showed a near 12 per cent gain on the week.
Brent, the global benchmark, rose $2.44, or 2.5 per cent, to $50 a barrel. It gained 10 per cent on the week.
Gasoline prices surged about five per cent on the day 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.
In Yemen, warplanes from a Saudi-led coalition killed 10 people in air raids on Friday, local officials said.
Some analysts also attributed US crude's strength to concerns that Tropical Storm Erika was headed toward oil and gas installations in the US Gulf, as visible on the US National Hurricane Center website.
Global oil prices are still at half their value from a year ago thanks to a huge oversupply of fuel and sluggish demand.
Worries over China's economy have compounded the falls in recent weeks.
Some analysts said the slump of nearly 30 per cent in just two months meant a rebound was due. The rally on Thursday was fed by a stock market rise, strong US growth data and a pipeline outage in Nigeria.
Some traders remained convinced the rally would fizzle and oil prices would head lower again.
"Spreads in US crude yesterday were weaker across the board, even though the spot contract was up 10 per cent," Tariq Zahir, an oil bear at Tyche Caspital Advisors in Laurel Hollow, New York, said.
"Today, while not weaker, they are also not significantly stronger. This confirms that the spread market doesn't buy this rally."
