Oil settles above $104 after bailout
Crude rises by more than $14 in three days as fears about the solvency of the financial markets ease on a proposed government bailout.
NEW YORK (CNNMoney.com) -- Oil prices zoomed back above $104 a barrel Friday as hope grew on Wall Street that a government bailout could help ease the credit crisis putting a stranglehold on the U.S. economy.
U.S. crude rose $6.67 to settle at $104.55 a barrel. It was the second-largest rise of oil prices in dollar terms on record, bested only by a $10.75 rise on June 6.
Oil's rally was boosted Friday as the government drafted a program to restore much-needed liquidity to the financial markets.
Treasury Secretary Henry Paulson said Friday he will continue to work with lawmakers through the weekend on the details. The plan will include a federal bailout of financial institutions by taking on tens of billions of dollars in untradable mortgage assets.
"The bailout took some of the pressure off the market, allowing some of the fundamental buying to come back in," said Peter Beutel, oil analyst at Cameron Hanover. "People began to do some long-term hedging, even though the overall trend in this market is lower."
After falling more than $10 Monday and Tuesday on fears that the crisis on Wall Street would further reduce demand for petroleum products, crude has gained back all of its losses - and then some - from earlier in the week. Oil prices rose by $6.01 - the second-largest margin ever - Wednesday, followed by a near $1 rise Thursday as initial end-of-the-world fears continued to ease.
