Crude oil futures rise as speculators buy back contracts

Crude oil futures on Friday rose from a 12-week low, as speculators who had sold contracts now rushed to buy them back.

On the New York Mercantile Exchange, crude oil futures for June delivery rose 13 cents to end at 48.67 dollars a barrel. Prices briefly touched as low as 47.52 during the intrading session. Meanwhile, on London's International Petroleum Exchange, the June Brent crude-oil futures contract climbed 32 cents to close at 48. 66 dollars per barrel.

Oil prices fell nearly 2 dollars during this week as speculators, in hoping that prices would fall further, sold futures contracts. However, they began to cashed in profits by purchasing these back at lower prices than they had sold them. This practice was called "short" or "sell-short".

"You are seeing some short covering because we have come of so far," said an risk manager in New York. "I still think that next week we are going down to 45 dollars; the downtrend is intact."

However, many analysts were still divided over the short-term oil trends. Some said the possibility that the Organization of Petroleum Exporting Countries cuts production during the driving season could push prices higher. While others expected oil futures to decline further due to the substantial increase in US inventories of crude oil.

Source: Xinhua