Oil is coming back!

Oil rallied again on Friday, with benchmark Brent crude on track for its largest two-week gain in 17 years, as falling oil rig counts and violence in producer Libya helped to further stall a selloff that began in June.

Crude prices have rallied nearly 20 percent over the past six sessions, but remain about 50 percent below their peak from the middle of last year, due to worries of a global oil glut.

Brent futures were headed for about a 10 percent gain on the week, its biggest since 2011, and 19 percent over two weeks, its largest since 1998.

Still, the price rebound has been accompanied by sharp market volatility.

U.S. crude oil futures have seen daily gyrations of up to 9 percent since last week as bulls and bears squared off positions on mixed signals the market could remain oversupplied through the first half while falling rig counts and reduced exploration budgets of oil firms suggested the glut may be overcome faster.





The worldwide count for oil drilling rigs fell by 261 in January, oil services firm Baker Hughes said. The average number of U.S. oil rigs, meanwhile, fell by 199 in January, following the largest weekly drop since 1987, in the week to Jan 23. Baker Hughes will provide updated U.S. rig count data later on Friday.

"People have only started playing attention to the oil rig count in the past week despite the fact they have been falling for weeks," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut. "I think the people really benefiting from these market gyrations are the high frequency traders as volumes are really up."

The two-week volume in Brent was at a record high of about 3 million contracts, Reuters data showed.

Brent was up $1.54, or 2.7 percent, at $58.11 a barrel by 12:15 p.m. EST on Friday. U.S. crude rose $1.40 to $51.88.

Aside from the rig count data, the market was bolstered by fighting across Libya.

Stronger-than-expected U.S. jobs growth in January helped as well, though the data also raised expectations that a U.S. rate hike may happen as soon as mid-year.

"There are as many positive factors now in the market as negative, and everyone's waiting for the next shoe to drop," said Phil Flynn, analyst at Price Futures Group in Chicago.