Oil climbed more than $2 this morning, recouping part of Friday's 10 per cent dive as European leaders took bolder steps to pull the banking sector out of crisis, but some gains faded as traders curbed their initial enthusiasm.
Countries from Europe to Australia rushed out plans on Sunday to shore up their banks, trying to stem a crash in markets, while investment bank Goldman Sachs said the financial crisis had already done more damage than it expected to commodity demand, forcing it to dramatically cut price targets.
US crude for November delivery rose $2.03 to $79.73 a barrel by 4.43am, paring earlier gains to a peak above $81 a barrel as the initial flush of enthusiasm over the latest efforts to stave off a global recession lost some lustre.
Prices plunged nearly $9 on Friday to their lowest since September 10th, 2007, having dumped 17 per cent over last week, the biggest one-week loss since the 2003 war in Iraq.
London Brent crude rose $1.91 to $76.00 a barrel.
In Europe, government leaders agreed on commitments to provide capital for banks caught short of funds because of frozen money markets and to insure or buy into new debt issues, the latest in a series of bold measures.
The US Federal Reserve will consider all options in seeking to stabilise credit markets in a period that may bring negative growth, Dallas Fed President Richard Fisher said.
The news lifted US stock futures yesterday evening after they had plunged more than 18 percent last week in their worst-ever weekly fall as panicked investors dumped stocks on fears the economy was headed irreversibly into recession.
Slumping demand in the United States and other developed economies have sent oil prices off their July peak of above $147 a barrel, reached after surging consumption in emerging markets such as China sent commodities on a six-year rally.
Reuters