Oil rebounds seven percent on Obama’s spending plan

December 9th, 2008 - 5:25 am ICT by IANS  

Barack ObamaNew York, Dec 9 (Xinhua) Crude oil recovered from last week’s losses and rallied above $43 a barrel Monday after president-elect Barack Obama announced public works spending plan to revive the economy. Light, sweet crude for January delivery gained $2.9 to settle at $43.71 a barrel on the New York Mercantile Exchange. Price rose to as high as $44.70 a barrel during the trading.

Crude futures bounced back from a four-year low of $40.81 a barrel reached last Friday after Obama announced over the weekend plans for the largest US public works spending programme in half a century.

Investors speculated that the spending on roads, bridges and repairing school buildings will boost raw material demand and help to avert the economic downturn.

Oil was also pressured Monday as OPEC (the Organisation of the Petroleum Exporting Countries) signalled possibility of a deeper output cut.

OPEC President Chakib Khelil said Saturday that the organisation would announce a “severe” reduction of production quotas when it meets Dec 17 in Algeria. Some analysts predicted OPEC would cut supply by as much as two million barrels per day.

Crude oil is around 70 percent down from its record intra-day price $147.27 a barrel. OPEC announced an output quotas decrease of 1.5 million barrels a day in October, but failed to stabilise the plunging oil price as the investors focused on the slumping demand caused by a global economic slowdown.

In London, Brent crude for January delivery jumped $3.68 to settle at $43.42 a barrel on the ICE Futures Exchange.

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