Oil rocketed more than 10 percent higher on Thursday, posting its biggest one-day rally in years, as recovering equity markets and news of diminished crude supplies set off a short-covering surge by bearish traders.
Snapping back fiercely from a deep two-month slump that reached 6½ year lows this week, oil climbed as world stock markets rose on hopes Chinese government measures to stimulate the economy would pay off, while the dollar strengthened as risk aversion eased.
U.S. crude was up $3.96, or 10.3 percent, at $42.56 a barrel, marking its best day since March 2009 when it soared 11.1 percent.
Front-month Brent, the global oil benchmark, was up $4, or 10 percent, at $47 a barrel.
The rally was aided by news of a force majeure on Nigerian oil exports declared by Shell and private data indicating more drawdowns in crude this week at Cushing, Oklahoma, traders said. A big upward revision in second quarter U.S. economic growth helped.
It is on track for the biggest one-day gain for the contract since late January, when Brent ripped off six-year lows to rise by nearly $10 in three days, the start of a recovery that stabilized prices through the second quarter. Brent hasn't risen by more than 8 percent in a day since the financial crisis.
Shell declared force majeure on Bonny Light crude oil exports on Thursday following the shutdown of Trans Niger Pipeline and Nembe Creek Trunkline, which can carry around 180,000 barrels per day (bpd) of crude.