* Oil rises towards $99 on optimism, supply concerns
* U.S. government rushes to try to end financial crisis
* Dollar jumps vs euro and yen on U.S. asset plan
(Updates prices, analyst's comments, adds Sinopec's crude
import cuts)
By Fayen Wong
PERTH, Sept 19 (Reuters) - Oil rose for a third day on
Friday, towards $99 a barrel, on growing U.S. and Nigerian
supply concerns even as the dollar jumped on an emerging U.S.
government plan for a comprehensive solution to the financial
crisis.
Central banks around the world have pumped billions of
dollars to credit markets and U.S. authorities are working on a
plan to mop up bad debt [] after previous actions
including bailouts failed to restore market confidence, aiding
commodities that have been hammered by a flight from risk.
U.S. light crude for October delivery <CLc1> rose 62 cents
to $98.50 a barrel by 0645 GMT, posting a third day of gains as
prices rebounded from a seven-month low of $90.51 a barrel on
Wednesday in the aftermath of Lehman Brothers' <LEH.N>
collapse, the near failure of insurer AIG and takeover of
Merrill Lynch.
London Brent crude <LCOc1> rose 43 cents to $95.62.
"I think oil is up because there is more confidence in the
financial markets. There is a feeling that the crisis is
bottoming out and some may see it as a good time to buy," said
Gerard Rigby, an independent energy consultant based in Sydney.
While the financial crisis roiled markets from stocks to
bonds to foreign exchange, some oil traders were shifting their
focus back to fundamentals, with worries over falling U.S.
inventory levels and Nigerian attacks aiding a $7 recovery.
But analysts said ructions on Wall Street would still be a
key factor.
The U.S. dollar rose against the yen and recouped most
losses against the euro on Friday on reports Treasury Secretary
Henry Paulson is considering a comprehensive solution to the
current financial crisis. []
"Traders will continue to alternate focus between the
financial markets, which could result in further demand
destruction, dollar movements as well as production out of the
U.S. Gulf of Mexico," said Gerard Burg, a resource analyst at
the National Australian Bank in Melbourne.
Federal Reserve Chairman Ben Bernanke and Paulson plan to
work through the weekend with Congress on a comprehensive plan
to deal with toxic bank assets choking the financial system, a
Treasury spokeswoman said on Thursday. []
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.
Analysts said rising tensions in Nigeria's crude-rich Niger
Delta region will also lend support, with militants threatening
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.
Despite supply concerns in the U.S. and Nigeria, fresh
signs of weaker crude demand in China, the world's No. 2 energy
consumer, curtailed some of oil's earlier gains.
Asia's top refiner, Sinopec <0386.HK>, plans to reduce
crude oil imports by 8-10 percent from the amount originally
planned for the rest of the year, while cutting crude
through-put due to ample domestic fuel supplies, a company
official said on Friday. []
Oil market participants were also keeping a close eye on
No. 2 U.S. investment bank Morgan Stanley -- a major player in
energy markets -- which was said to be in advance talks to be
bought by U.S. retail bank Wachovia Corp <WB.N>.
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 counterparty concerns
over its credit status, although the move does not stop Morgan
Stanley from trading as normal in the open market.
[]
(Reporting by Fayen Wong; Editing by Clarence Fernandez)
