Investing.com - Crude oil futures fell to six-year lows before rallying sharply as investors returned to the market to close out bets on lower prices, a move known as short-covering.
On the ICE Futures Exchange in London, Brent oil for October delivery jumped 95 cents, or 1.93%, to trade at $50.19 a barrel during U.S. morning hours after hitting an overnight low of $48.24, the weakest level since March 2009.
On Friday, London-traded Brent prices tumbled 85 cents, or 1.7%, to end at $49.24. Brent futures lost $2.94, or 6.9%, last week, the sixth straight weekly decline, as ongoing concerns over a glut in world markets continued to drive down prices.
Global oil production is outpacing demand following a boom in U.S. shale oil production and after a decision by the Organization of Petroleum Exporting Countries last year not to cut production.
Elsewhere, crude oil for delivery in September on the New York Mercantile Exchange dropped to an intraday low of $43.39 a barrel, a level not seen since March 2009, before trading at $44.50, up 63 cents, or 1.4%.
On Friday, Nymex oil closed at $43.87, down 79 cents, or 1.77% on the day. New York-traded oil futures plunged $2.99, or 6.9%, last week, the eighth consecutive weekly loss, as worries over high domestic U.S. oil production weighed.
Industry research group Baker Hughes (NYSE:BHI) said late Friday that the number of rigs drilling for oil in the U.S. increased by six last week to 670, the third straight weekly gain.
There are still about 60% fewer rigs working since a peak of 1,609 in October, though the pace of declines has slowed considerably in recent weeks, fueling concerns that U.S. shale production could rebound in the months ahead.
Meanwhile, the spread between the Brent and the WTI crude contracts stood at $5.69 a barrel, compared to $5.37 by close of trade on Friday.
Concerns over the health of China's economy, a broadly stronger U.S. dollar and prospects of higher interest rates in the U.S. later this year also weighed.