Oil price rebound relieved oil markets

Oil prices remained stable on Friday after rebounding from six-and-a-half-year lows on recovering stock markets and news of tapered crude supplies.

Stock markets from around the world had rallied on Thursday shaking off a decline which is related to China growth fears , as strong U.S. economic data heaved investor sentiment, and the dollar stepped up for a third consecutive session.

U.S. crude edged down 3¢ to $42.53 per barrel, after closing to $3.96, or 10.3%, at $42.56 per barrel, its biggest one-day percentage gain since March 2009.

The world oil prices jumped to $50 a barrel in the second day of frantic short-covering rally on Friday, with violence in Yemen and storm in the Gulf as well as refinery outages help stretch the biggest two-day rally in six years. Equities rebounded on Thursday while oil rallies, but on Friday the oil pushed higher even if stock markets were quiet.

The rally was aided by news of superior force on Nigerian oil exports declared by Shell and private data that indicates more drawdowns in crude this week at Cushing, Oklahoma, traders said.

There were signs that Thursday rally, while maximum, may not last long as traders said. Inter-month spreads, which is always a good indicator of physical market conditions, weakened on the day while the turnover was rather high but not to the extreme. Front-month Brent crude traded just over 315,000 lots, the most since early July but a quarter less than early February highs.

Brent, the global oil benchmark LCOc1, closed up $2.49, or 5%, at $50.05, after almost reaching $51 a barrel. It has gained 10% on the week.

U.S. energy companies added another rig to their fields over the past week, a sixth consecutive gain that is expected to temper the decline in domestic production over the coming months.