MW: Crude rallies on recapitalization plan for U.S. banks
By Polya Lesova, MarketWatch
NEW YORK (MarketWatch) -- Crude-oil futures extended their strong gains Tuesday, buoyed by the U.S. government's plan to inject up to $250 billion into the country's largest banks, which eased some worries about the impact of the financial crisis on economic growth and with it, energy demand.
Other energy futures also posted strong gains in electronic trading on Globex.
Crude for November delivery gained $3.28 to $84.52 a barrel, up $3.28.
"A coordinated move by G7 [Group of Seven] governments to rescue their financial institutions and plans by the U.S. government to buy straight into banks' equity has kept markets underpinned," said analysts at Sucden Research in a note.
"In addition, the dollar has given up some of its gains, after investors bought heavily into the greenback as a safe-heaven currency during the turmoil in financial markets last week," they said.
In Washington, Treasury Secretary Henry Paulson and Federal Reserve chief Ben Bernanke said they're confident that the sweeping financial-market rescue plan, including injecting capital directly into banks, will work.
"As Americans well know, the challenges evident in the financial markets and in the economy are large and complex, but I believe that the steps taken today will help us overcome them," Bernanke said.
Paulson said that he regretted having to take the actions but that they're "what we must do to restore confidence to our financial system."
On Wall Street, U.S. stock futures pointed to a continuation of Monday's rally. Dow industrial futures leaped 352 points. See Indications.
Crude futures rose $3.49 a barrel, or 4.5%, on Monday to close at $81.19 a barrel on the New York Mercantile Exchange, as efforts by European and U.S. governments to prop up their ailing banking sectors revived prospects for oil demand.
In the currency markets Tuesday, the Dollar Index which tracks the performance of the greenback against a basket of six major currencies, fell 0.6% to 80.87. See Currencies.
Rounding out the early action in energy futures on Globex, November reformulated gasoline rose 7 cents to $1.99 a gallon, November heating oil gained 7 cents to $2.41 a gallon and November natural gas futures added 12 cents to $6.80 per million British thermal units.
