Oil Rises for a Second Day as Governments Move to Support Banks

By Mark Shenk

Oct. 14 (Bloomberg) -- Crude oil rose for a second day, following stocks higher, as the U.S. prepared to invest $250 billion in banks in an effort to avert a global recession.

Oil is heading for the greatest two-day gain in three weeks as the MSCI World Index climbed to its biggest two-day gain on record after the U.S. joined European nations in taking stakes in lenders. China, the world's second-largest energy user, increased oil imports by 10 percent in September to meet rising demand.

``The bank rescue package has got the stock market rising and that's providing support for energy,'' said Tom Bentz, senior energy analyst at BNP Paribas in New York. ``We're trading off what is happening in financial markets, and that should continue to be the case. Any sign that the economy is stabilizing is good for the energy markets.''

Crude oil for November delivery rose $1.41, or 1.7 percent, to $82.60 a barrel at 9:26 a.m. on the New York Mercantile Exchange. Prices, which are down 1.3 percent from a year ago, have dropped 44 percent from the record $147.27 a barrel reached on July 11.

``Whether or not we continue to march in lockstep with equities is a big question,'' said Gene McGillian, an analyst at TFS Energy LLC in Stamford, Connecticut. ``It's clear that the economy will be lurching around for a while, which raises concerns about energy demand.''


Chinese imports climbed to 15.03 million metric tons, or 3.66 million barrels a day, last month, the Beijing-based Customs General Administration of China said on its Web site today. The 10 percent rate of increase in September compares with an 11.5 percent gain in August and a 7 percent decline in July.

Steady Growth

``The Chinese demand figures show that they are still growing strongly,'' Bentz said.

The U.S. currency weakened as much as 1.4 percent against the euro to $1.3769, bolstering the appeal of dollar-priced commodities used to hedge against inflation.

Brent crude oil for November settlement rose $2.24, or 2.9 percent, to $79.70 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.