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Oil price gets largest-ever one-day gain

23 September 2008 09:12 (UTC +04:00)

Baku. Vugar Mustafayev - APA-Economics. Oil prices surged US$16.37 to settle at US$120.92 a barrel, its biggest one-day jump on record. A sharp fall in the US dollar added to oilâ€™s gains.
In London, November Brent crude rose $6.43 to settle at $106.04 a barrel on the ICE Futures Exchange.
Crude has gained about $30 in a dramatic four-day rally that has at least temporarily halted oilâ€™s steep two-month slide below $100. At this rate, crude is within striking distance of its all-time record of $147.27, reached in July.
The rally came as energy traders grappled with the implications of the governmentâ€™s proposed initiative to stem the U.S. financial crisis by absorbing billions of dollars of banksâ€™ bad mortgage-related securities. Anxiety over the plan also sent stocks sharply lower Monday; the credit markets were calmer than they were last week, but still showing the effects of investorsâ€™ nervousness.
Investors fear that the government will have to dramatically ramp up borrowing to pay for the mammoth rescue effort, an inflationary move that could further devalue the dollar and trigger another wave of safe-haven buying in investments like commodities.
November WTI closed at $108.90 and Brent at $105.52 in the morning today.