Major Short Covering Rally

Sunday, October 11, 2009

NYMEX Crude Oil futures surged in the last trading day of the week, rallying more than 10%. A major short squeeze went through as investors bought the front month contract on the heels of 5 consecutive down days. Oil was at a 2 month low.

Some investors who had been shorting the March contract were also buying back the contract to cover their short positions before the contract expires.

Crude for March delivery ended up 3.53 dollars a barrel, or 10.4%, at $37.51 a barrel on the NYMEX.

Despite Friday's surge, the March Nymex Future contract lost 6.6 percent this week.

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