Oil Rises for a Fourth Day on U.S. Bailout Plan, Weaker Dollar

By Mark Shenk

Sept. 22 (Bloomberg) -- Crude oil futures rose for a fourth day on speculation that a proposed $700 billion U.S. government rescue plan for the finance industry may bolster the economy and shore up demand.

Oil has climbed 17 percent since Sept. 16, the biggest four- day gain since October 2000, as lawmakers pledged fast consideration of the Treasury's plan to buy devalued mortgage- related securities. The dollar fell to a three-week low against the euro, increasing the appeal of commodities as a hedge.

``We are continuing to move higher on optimism that the U.S. bailout plan will boost the economy,'' said Tom Bentz, senior energy analyst at BNP Paribas in New York. ``The dollar is down, which is giving the market a further boost.''

Crude oil for October delivery rose $2.41, or 2.3 percent, to $106.96 a barrel at 9:25 a.m. on the New York Mercantile Exchange. Futures touched $107.80, the highest since Sept. 8. The October contract expires today. The more-active November contract rose $2.48, or 2.4 percent, to $105.23 a barrel.

``There's positive sentiment in most asset markets,'' said Brad Samples, a commodity analyst for Summit Energy Inc. in Louisville, Kentucky. ``The paralysis of financial markets may be ending. The implication is that once the financial markets function, the economy will grow and demand will rise.''

The U.S. currency dropped on concern that the Treasury's plan to buy $700 billion of troubled assets will widen the country's budget deficit. Investors looking to hedge against the dollar's decline earlier this year have helped lead oil, gold, corn and gasoline to records.

Weaker Dollar

The dollar fell 0.9 percent to $1.4599 per euro, from $1.4466 on Sept. 19. It touched $1.4625, the weakest level since Sept. 1.

Oil fell more than $10 a barrel early last week as the bankruptcy filing of Lehman Brothers Holdings Inc. shocked world equity markets.

Saudi Arabia, the world's biggest oil exporter, reduced crude-oil supplies to major international oil companies by about 5 percent, compared with the previous month, and cut supply to U.S. refiners, Reuters said, citing industry sources.

Brent crude oil for November settlement rose $2.84, or 2.9 percent, to $102.45 a barrel on London's ICE Futures Europe exchange.

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.