Oil rises as traders covering position

Crude oil rose for the first day in three as traders closed out bets that prices would fall amid speculation OPEC may cut output for a fourth time.

Investors purchased contracts to profit from so-called short sales after crude dropped 7.4 percent yesterday as U.S. inventories showed a bigger-than-expected gain. Algerian Energy Minister Chakib Khelil said yesterday OPEC is likely to reduce output again at this weekend’s meeting. Other ministers have called for the group to halt reductions.

Crude has sold off quite a bit so people are covering their positions. Traders are also buying as insurance if there is an OPEC announcement of a cut. But if OPEC continues saying they want to see how compliance is, we going to see it drift lower.

Crude oil for April delivery rose as much as 83 cents, or 2 percent, to $43.16 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude oil for April settlement rose as much as 90 cents, or 2.2 percent, to $42.30 a barrel on London’s ICE Futures Europe exchange.