*U.S. Treasury plans S&L style rescue of financial markets
*Concerns mount over hurricane-hit U.S. oil stockpiles
*Rebel attacks disrupt Nigerian oil sector
(Updates prices with settlements, adds details throughout,
changes dateline from LONDON)
NEW YORK, Sept 18 (Reuters) - Oil prices rose on Thursday
amid optimism over wide-ranging efforts to solve the U.S.
financial crisis and amid mounting concern over the impact of
back-to-back hurricanes on U.S. energy inventories.
U.S. crude <CLc1> rose 72 cents to settle at $97.88 a
barrel, adding to a $6.01 gain on Wednesday. London Brent crude
<LCOc1> 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 percent 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.
Some 93 percent of the oil production in the Gulf of Mexico
-- source of a quarter of the nation's crude output -- remained
idled on Thursday along with about 14.5 percent 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 on 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.
Concerns over the fate of U.S. investment bank Morgan
Stanley -- a major player in energy markets -- has kept price
gains in check, however. []
Reports that the No. 2 U.S. investment bank, whose shares
are down 50 percent this month, could be up for sale and bought
by regional banking powerhouse Wachovia Corp <WB.N>, have
unnerved markets.
Morgan Stanley withdrew from a half-hour oil trading window
-- used to assess benchmark prices -- after pricing agency
Platts placed it under review because of counter-party concerns
over its credit status, two industry sources said on Thursday.
[]
The Platts review does not stop Morgan Stanley trading oil,
but means that its bids and offers will not be taken into
account during the daily half-hour "window" during which Platts
assesses prices in over-the-counter oil markets.
Investors flocked to oil and other commodities earlier this
year as a hedge against falling equities and a weak dollar,
sending crude to a peak above $147 in July before slowing demand
in consumer nations sent prices tumbling.
Some market analysts were unconvinced that oil would see the
same kind of safe-haven flows during the latest round of the
credit crunch.
"Its place as a hedge against this crisis has run its
course," said Alaron trading analyst Phil Flynn. "If there is no
money to lend to build factories or buy Chinese goods then why
in the world will we need so much oil?"
(Reporting by David Sheppard and Matthew Robinson, additional
reporting by Felicia Loo in Singapore; editing by Matthew
Lewis)
