Oil prices jump 4 percent after 3-week slump

Oil prices rebounded sharply May 26 after weeks of being knocked down by economic uncertainty.

After dropping more than 20 percent in three weeks, oil rallied 4 percent, the best one-day percentage gain since Sept. 30.

Many investors now think oil is undervalued and a rally in equities markets sparked a parallel rally in crude, said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service.

“I’m not saying the correction is over” in energy commodities, Kloza said. “But people are now saying, ‘I can live with these prices’.”

Benchmark crude for July delivery added $2.76 to settle at $71.51 a barrel on the New York Mercantile Exchange. The price was $86.84 on April 6. In London, the Brent crude rose $2.19 to settle at $71.74 a barrel on the ICE futures exchange.

Oil also jumped after the Energy Information Administration said U.S. gasoline supplies dropped unexpectedly the week ending May 21. Gasoline stockpiles shrank by 200,000 barrels while demand grew compared with last year. The EIA also reported that oil supplies rose more than expected.

—The Associated Press