Oil was up $1 a barrel on Thursday after the US Senate approved a $700 billion bailout of the US financial industry, but erased earlier gains as concerns remained over weakening demand and growing supplies in the US.
The package for Wall Street, which has yet to be approved by the House of Representatives, rekindled hopes that the credit crisis can be eased, but traders and analysts said the supportive impact would be limited as eyes remained on falling demand.
US light crude for November delivery rose $1.03 to $99.56 early on Thursday, having risen as high as $100.37 before the vote. It settled down a hefty $2.11 at $98.53 on Wednesday when US government data showed supplies rising and on a firmer dollar.
London Brent was up 92 cents at $96.25.
“It should stabilize the equity markets so crude prices will get some support from it. But if demand falls off a cliff, bets are off. I think we will congest here for a while and then it is up to the economy and winter demand,” said Tony Nunan, risk management executive at Tokyo-based Mitsubishi Corp.
Oil prices have tumbled from record highs above $147 a barrel in July on signs of slowing oil demand from industrial economies.
Pressure has also come as investors sell oil and other commodities and move cash into safer investments amid turmoil in financial markets.
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