By Christian Schmollinger Oct. 14 (Bloomberg) -- Crude oil rose in New York, heading for its biggest two-day gain in three weeks, as governments in the U.S. and Europe acted to stem the worst financial crisis since the 1930s. Oil followed stock markets higher as the Bush administration plans to in inject about $125 billion into nine major U.S. banks in a push to restore confidence. The International Energy Agency last week said global oil demand this year will grow at the slowest pace since 1993 as economies slide into a recession. ``We had a big bounce in the equity market so there is some hope that we've reached a bottom,'' said Toby Hassall, a research analyst with Commodity Warrants Australia Ltd. in Sydney. ``At the moment the market is just reacting to sentiment day to day. The underlying economic situation is not going to be supportive for prices.'' Crude oil for November delivery rose as much as $2.49, or 3.1 percent, to $83.68 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $82.50 a barrel at 1:49 p.m. Singapore time. Oil has climbed 6.2 percent in the past two days, the most since Sept. 22. Prices, which are down 4.2 percent from a year ago, have dropped 44 percent from the record $147.27 a barrel reached on July 11. ``This gain is psychological as there is an expectation the financial turmoil will be over and there is a recovery of the economy,'' said Tetsu Emori, a fund manager at Astmax Ltd. in Tokyo. ``It's too early to say that demand for commodities will be coming back. These things take time.'' Rescue Plan The U.S. government will announce a plan to rescue frozen credit markets that includes spending about half of a total of $250 billion for preferred shares of nine major banks, people briefed on the matter said. The companies are Citigroup Inc., Wells Fargo & Co., JPMorgan Chase & Co., Bank of America Corp., Goldman Sachs Group Inc., Morgan Stanley, State Street Corp., and Bank of New York Mellon Corp., the people said. One of the people also said Merrill Lynch & Co. will receive an investment. Asian stocks climbed for a second day, following the biggest surge in U.S. equities since the 1930s yesterday. New York oil futures dropped 17 percent last week, the biggest one-week decline since the U.S.-led invasion of Iraq in March 2003. Copper, nickel and aluminum also decreased as equity markets plunged and the International Monetary Fund warned the world was on the cusp of a recession. Inventories Gain Brent crude oil for November settlement climbed as much as $1.92, or 2.5 percent, to $79.38 a barrel on London's ICE Futures Europe exchange. It was at $78.41 a barrel at 1:50 p.m. Singapore time. U.S. oil and gasoline inventories probably rose last week as production increased and refineries opened units that were shut last month because of Hurricanes Gustav and Ike, a Bloomberg News survey of analysts showed. Crude oil stockpiles probably increased 2.6 million barrels in the week ended Oct. 10 from 302.6 million the week before, according to the median of 10 analyst estimates before an Energy Department report this week. Refineries probably operated at 83.8 percent of capacity, up 2.9 percentage points from the week before, the survey showed. Gasoline stockpiles probably rose 3 million barrels last week, from 186.8 million barrels the week before, according to the survey. Supplies of distillate fuel, a category that includes heating oil and diesel, probably gained 500,000 barrels from 122.6 million barrels. The Energy Department is scheduled to release its weekly report on Oct. 16 at 11 a.m. in Washington. To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net.

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