* U.S. proposed a $700 billion bank bailout plan
* Nigerian rebels declare unilateral ceasefire
* Oil firms, refineries to restore U.S. production after
Ike
(Adds details)
By Fayen Wong
PERTH, Sept 22 (Reuters) - Oil extended last week's massive
gains and rose above $105 a barrel on Monday, on hopes that the
U.S. government's $700 billion rescue plan would restore
stability in the financial system and support global energy
demand.
Sweeping government measures to rescue the financial system
and restore confidence in shaky markets spurred a huge relief
rally across markets on Friday, when oil rose almost 7 percent
to cap its biggest three-day rally in a decade.
Analysts said that while there was still uncertainty about
the workings of the rescue plan, investors were hopeful that
the bailout plan would put an end to the recent financial
turmoil that has rocked Wall Street.
U.S. light crude for October delivery <CLc1> rose $0.60 to
$105.15 a barrel by 0055 GMT, rebounding from earlier losses of
as much as $1.20 which analysts attributed to worries about the
workings of the rescue plan.
The contract jumped $6.67 to settle at $104.55 a barrel on
Friday, bringing gains since Wednesday to 14.7 percent --
biggest three-day surge since December 1998.
London Brent crude <LCOc1> rose $1.03 to $100.64 on Monday.
"There is still uncertainty on the proposed bailout and if
it will have a sustainable impact. But for now, investors are
focusing on the bullish sentiments that has swept through the
financial markets and some traders are probably seeing a buying
opportunity," said Gerard Burg, a resource analyst at the
National Australian Bank in Melbourne.
"In the broader context of the oil market, there are still
plenty of supply side pressures."
The Bush administration and Congress on Sunday ramped up
talks on an unprecedented $700 billion bank bailout as they
battled the clock to prevent further financial turmoil that
risks hurtling the economy into a deep and damaging recession.
[]
The news sparked a rally across equities markets in Asia,
where Tokyo's Nikkei average rose 2.5 percent and Australia's
benchmark S&P/ASX 200 index gained over 3 percent.
Ructions in the U.S. financial system, which saw the
collapse of investment bank Lehman Brothers <LEH.N>, insurer
AIG <AIG.N> bailed out by the government and Merrill Lynch
<MER.N> forced to sell itself to Bank of America <BAC.N>, have
raised questions about the stability of the U.S. economy -- a
factor that helped push oil to a seven-month low of $90.51 a
barrel last week.
Oil prices remain sharply down from their peak above $147 a
barrel in mid-July, pressured by mounting evidence that high
energy costs and economic troubles are undercutting global fuel
consumption.
Nippon Oil Corp <5001.T>, Japan's biggest oil refiner, said
on Monday it has cut its crude oil refining volume for
September by 240,000 kilolitres from its original plan to 3.22
million kl due to slow demand. []
Oil's rise on Monday were also limited by news that
Nigeria's main militant group had begun a unilateral ceasefire
on Sunday after a week of clashes with the military and attacks
on oil installations which cut output in Africa's top producer.
[]
The week-long attack on oil facilities forced Shell to
declare on Saturday a second force majeure on crude oil
shipments from Nigeria. []
Analysts said the restart of oil and gas production in U.S.
Gulf of Mexico as well as refineries in Texas city could also
limit oil's gains.
About a quarter of U.S. Gulf of Mexico natural gas output
and 11 percent of oil production were back on line Friday as
recovery from Hurricanes Gustav and Ike continued, the U.S.
Minerals Management Service said. []
Eleven U.S. oil refineries along the Gulf Coast with 2.202
million barrels per day in refining capacity were also back to
normal operations as of Friday after being shut by recent
hurricanes. []
(Reporting by Fayen Wong; Editing by Louise Heavens)
