Oil Gains a Third Day as Concern Over Financial Turmoil Eases

By Christian Schmollinger

Sept. 19 (Bloomberg) -- Crude oil rose for a third day in New York as governments' measures to prevent the global financial market turmoil from spreading eased concern that economic growth would slow.

Oil gained as Asian stocks followed the lead of Wall Street, with the MSCI Asia Pacific Index surging 3.9 percent. The dollar climbed as much as 1 percent against the euro today as the U.S. government works on a plan to shore up banks and insurers. Central banks agreed yesterday to pump $180 billion into global money markets.

``There does seem to be a bit of brighter mood,'' said Gerard Burg, an energy and minerals economist at National Australia Bank Ltd. in Melbourne. ``There was a positive reaction to the talk of increasing liquidity from the U.S. Fed and also the central banks in Europe and Asia. That kind of coordinated approach gave some confidence to the markets.''

Crude for October delivery gained as much as $1.02, or 1 percent, $98.90 a barrel on the New York Mercantile Exchange. It was at $98.63 at 3:03 p.m. Singapore time. Earlier, the contract fell as much as 0.5 percent to $97.39 a barrel.

Oil futures are up 2.8 percent this year and down 33 percent from a record $147.27 a barrel reached on July 11.

Brent crude oil for November settlement rose as much as 91 cents, or 1 percent, to $96.10 a barrel on London's ICE Futures Europe exchange. It was trading at $95.92 a barrel at 3:05 p.m. Singapore time.

Paulson, Bernanke

Congressional leaders meeting late yesterday in Washington said they will work to pass legislation soon. The initiative, which may insure money-market funds, is aimed at removing the devalued mortgage-linked assets at the root of the worst credit crisis since the Great Depression.

U.S. stocks rallied the most in six years yesterday on the prospects for the government plan to shore up financial markets, while regulators and pension funds took steps to curb bets against banks and brokerages.

The Dow Jones Industrial Average jumped 617 points from its low of the day and the Standard & Poor's 500 Index climbed 4.3 percent.

Oil Stockpiles

Oil tumbled more than $10 in the first two days of the week as Lehman Brothers Holdings Inc. filed for bankruptcy, and Merrill Lynch & Co. was sold to Bank of America Corp.

Concerns about the availability of supplies from the U.S. Gulf of Mexico and Nigeria have kept prices above $90 a barrel this week.

The U.S. Energy Department reported earlier this week that crude oil stockpiles dropped the most since May because of disruptions from Hurricane Ike.

U.S. energy companies have about 93 percent of oil production and 78 percent of natural-gas output idled in the Gulf of Mexico after Hurricanes Gustav and Ike, the U.S. Minerals Management Service, said yesterday on its Web site. About 1.2 million barrels a day of output are closed along with 5.7 billion cubic feet a day of natural gas.

Nigerian Attacks

Nigerian militants stepped up attacks on oil companies, raising concern supply may be disrupted.

The Movement for the Emancipation of the Niger Delta, the main militant group in Nigeria's southern oil region said it destroyed a major pipeline operated by a unit of Royal Dutch Shell Plc yesterday, the sixth day of attacks targeting the country's oil industry.

The attack occurred at 6:30 p.m. local time on the pipeline in the ``Elem-Kalabari Cawthorne Channel axis,'' MEND spokesman Jomo Gbomo said in an e-mailed statement. Shell and Nigerian military officials couldn't be immediately reached for comment.

Nigeria has lost 280,000 barrels of daily crude output to attacks launched by militants in the Niger Delta oil region since Sept. 13, an official with the state-owned oil company said Sept. 17.

``Oil has gotten support from the supply-side issues,'' said David Moore, a commodity strategist with Commonwealth Bank of Australia Ltd. in Sydney. ``There is the obvious impact of the hurricane activity on U.S. production and inventories. Nigeria remains an area of potential risk.''

To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net.