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NEW YORK: Oil prices rallied on Monday, lifted by a burst of optimism after world leaders formed a united front to tackle the global financial crisis.
New York's main contract, light sweet crude for delivery in November, leapt 3.49 dollars to close at 81.19 dollars a barrel, recovering from one-year lows hit on Friday.
In London, Brent North Sea crude for November gained 3.37 dollars to 77.46 dollars.
"Oil prices were higher after world leaders rushed out plans over the weekend to help stabilise their banking systems," said Sucden analyst Nimit Khamar.
"The announcements over the weekend helped lift sentiment and calmed fears of a global recession, which buoyed oil prices after heavy losses last week."
European markets cheered an action plan to combat the crisis agreed by the eurozone's 15 nations Sunday that includes a guarantee of interbank lending and the option of recapitalising banks.
The euphoria was echoed on Wall Street. The Treasury announced on Monday that it was gearing up to buy stakes in ailing financial firms, under a 700-billion-dollar banking rescue package approved 10 days ago.
On Friday, amid a record rout on global stock markets, the New York oil contract had plunged nearly nine dollars to its lowest level since October 2007, at 77.70 dollars, well below its record peaks above 147 dollars in July.
"It appears the utter lack of confidence exhibited on Friday is being replaced with a modicum of confidence," said John Kilduff, analyst at MF Global.
Iran, the world's fourth largest oil producer, predicted over the weekend that OPEC would cut oil output at an emergency meeting due next month in the face of slowing demand in a bid to support prices.
The 12-nation Organisation of the Petroleum Exporting Countries last week announced it would hold a meeting in Vienna on November 18 to discuss the effects of the international financial crisis.
"I think it's certainly on the cards that OPEC might trim production targets in November but we have to wait and see," said David Moore, a Sydney-based commodity strategist with the Commonwealth Bank of Australia.
Moore added that the cartel was unlikely to want to "exacerbate the difficult economic situation."
A cut in output could send prices soaring once again. Crude prices broke through 100 dollars a barrel for the first time at the start of 2008.
"For oil it is clear that the next few days will be defining as the market comes to grips with this changing economic environment," said Phil Flynn at Alaron Trading.
"Oil that defied economic reality at 147 dollars a barrel is now in the process of finding a price that the whole world can live with." - AFP/de
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