Oil falls back after topping $100 a barrel, still ends higher
NEW YORK -- Oil prices rose Thursday on optimism over wide-ranging efforts to solve the U.S. financial crisis and on mounting concern over the effect of back-to-back hurricanes on U.S. energy inventories.
U.S. crude rose 72 cents to settle at $97.88 a barrel, adding to a $6.01 gain Wednesday. It pushed earlier above $100 a barrel. London Brent crude rose 35 cents to $95.19.
The gains came after a report U.S. Treasury Secretary Henry Paulson has been promoting a proposal to congressional lawmakers to create an entity to deal with the bad debt, similar to what was done in the U.S. savings and loan crisis of the 1980s.
Earlier in the day, the world's top central banks joined forces to throw a multibillion-dollar lifeline to global markets in a dramatic effort to free up bank-to-bank lending, frozen by the upheavals on Wall Street.
The strife on financial markets this week had pushed crude down 10% on Monday and Tuesday in the biggest two-day slump since 2004 as investors fled oil for saver havens.
Dealers said the market was also getting a lift from continued energy supply disruptions in the United States in the wake of hurricanes Gustav and Ike.
About 93% of the oil production in the Gulf of Mexico — source of a quarter of the nation's crude output — remained idled Thursday along with about 14.5% of the nation's refined fuel capacity.
U.S. gasoline inventories have dropped to their lowest level on record due to the impact of the storms and the Department of Energy is considering asking the International Energy Agency for a release of emergency fuel stockpiles.
"There is plenty of bullish fundamental news out there," said Addison Armstrong, director of market research at Tradition Energy.
Rising tensions in Nigeria's crude-rich Niger Delta region also lent support, with militants threatening Wednesday to broaden their "oil war" to offshore oil fields. The Movement for the Emancipation of the Niger Delta has cut one-fifth of OPEC member Nigeria's oil output.
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