Oil climbed towards $40 a barrel today, partly reversing overnight losses, as some investors took positions ahead of the approval of a $800 billion-plus stimulus package by the US government as early yesterday.
But doubts over whether a US bank rescue plan, to be revealed later in the day, would be enough to stem the global financial crisis weighed on sentiment, capping oil's gains.
US light crude for March delivery rose 53 cents to $40.09 a barrel by 6.39am. The contract settled down 61 cents at $39.56 a barrel yesterday.
London Brent crude rose 52 cents to $46.54, maintaining a rare premium against US prices.
“There isn't a lot of new information out there about the US stimulus package or bank rescue plan, so the gain is probably due to some investors taking positions ahead of those announcements,” said Clarence Chu, a trader at Hudson Capital Energy in Singapore.
The US stimulus bill - a mixture of tax cuts and public spending measures - passed a key procedural hurdle in the US Senate today, paving the way for the chamber to pass the bill today.
President Barack Obama said only the government could rescue the world's biggest economy from a “negative spiral”, as investors around the globe looked to the United States to lead the way out of the global financial crisis.
But worries over the impact of the US stimulus package lingered.
Dallas Federal Reserve President Bank Richard Fisher said on Monday that he did not expect the U.S. economy to grow in 2009 and much hinged on the impact of the package that is being debated by the U.S. congress.
The global financial crisis, which has thrown a host of major economies into a recession, has also slashed world fuel demand and dragged oil prices from a record high of above $147 a barrel in July.
Reuters