Oil rises above $32 a barrel in biggest rally in seven years

Oil rallied on Friday, capping the biggest two-day advance in more than seven years after a slump to a 12-year low prompted some investors to buy back record bearish bets.

U.S. benchmark crude for March delivery gained $2.66, or 9 percent, to $32.19 a barrel on the New York Mercantile Exchange, up 21 percent in two days since the February contract expired Wednesday at $26.55 a barrel. It was the biggest two-day gain since September 2008.

“Oil is going to rally into the spring,” said James Cordier, founder of Optionsellers.com in Tampa, Fla. “It’s a short-covering rally, but we do think it has legs to continue.”

Oil is still down about 13 percent this year as turbulence in global markets has added to concern over brimming U.S. stockpiles and the prospect of additional Iranian barrels. Markets could “drown in oversupply,” sending prices even lower, according to the International Energy Agency.

But Pierre Andurand, the founder of Andurand Capital Management, who correctly predicted the slump in oil prices, said the commodity will end the year higher.

The price of oil will probably rise to $50 a barrel this year and $70 a barrel in 2017, though investors should expect heightened volatility along the way, Andurand said Friday on Bloomberg TV.

Oil may be the “trade of the year” if it can weather the surge in the Middle East producer’s shipments, according to Citigroup.

“There will be an initial wave of supply from Iran, but once that’s done, it will be flat and I think that’s when you start seeing opportunities for oil to turn,” Ivan Szpakowski, an analyst at Citigroup in Hong Kong, said Friday.

Citigroup and other forecasters predict a gain in the second half of the year, projecting an average Brent price of $41 a barrel in the third quarter and $52 in the last quarter.

This story was originally published January 22, 2016 at 4:27 PM with the headline "Oil rises above $32 a barrel in biggest rally in seven years."