Oil prices surge after taking a hit this week

We’ve heard a lot about psychology in oil prices lately.

Some stories mention the “psychological” threshold of $60 a barrel. Well, many psyches were put on edge this week, as Brent crude closed below that mark on Tuesday and Thursday, territory it hadn’t seen since May 2009. But it surged $2.11 to $61.38 Friday, a gain of 3.4 percent.

U.S. crude (WTI, or West Texas Intermediate) rose $2.41, to $56.52, up 4.5 percent.

Has oil started to climb back up again after hitting the ceiling? According to Reuters:

While some traders may be betting that $60 a barrel Brent represents a likely floor for the market, others remain unconvinced. With uncertainty high, demand for options has surged this week, with the CBOE crude oil volatility index soaring to its highest since 2011.

“This is a surprisingly forceful run up as fundamentally nothing’s changed in this market in terms of supply-demand,” said Gene McGillian, senior analyst at Tradition Energy in Stamford, Connecticut.

“I think the switch in WTI’s front-month and the second short-covering act for the week kind of got overblown.”