Crude off slightly after high above $65, as natural gas jumps as much as 8% SAN FRANCISCO (MarketWatch) -- Crude-oil futures reversed course to trade slightly lower Monday, holding above the $60-per-barrel level after climbing as much as 7%, as traders gauged the potential for increased energy demand from China, which announced a more-than-$500 billion plan to boost its economy. Crude for December delivery fell by 21 cents to $60.83 a barrel in electronic trading on Globex, reversing course after earlier rallying to a high of $65.56. Natural-gas futures tacked on as much as 8%, however, as traders eyed increased demand for the fuel during the winter heating season. Neal Ryan, a managing partner at Ryan Oil & Gas Partners, expected oil prices to pull back as the day rolled on. "But it's all a guess as bets are made to gauge how deep any global recession will be in the coming year," he said in emailed comments. "The run up certainly was accomplished this morning on the back of the Chinese announcement, but the follow-through on continued output cuts will be what allows prices to finally level off and start climbing higher in the near term," he said. The December crude contract closed with a gain of 10% last week on the New York Mercantile Exchange. China's announcement of a huge package was the key to oil's reversal Monday morning, said Kevin Kerr, editor of Global Commodities Alert at KerrAlert.com. Beijing unveiled Sunday what it called a "massive" economic stimulus package, valued at about 4 trillion yuan ($586 billion), to reverse slowing growth in the world's most populated country. See full story. "It's a lot of stimulus that the market wasn't expecting," said Phil Flynn, a vice president at Alaron Trading. "It's a two-year project, and it will increase energy demand from China." China's state-run news agency, Xinhua, said the program "will loosen credit conditions, cut taxes and embark on a massive infrastructure spending program in a wide-ranging effort to offset adverse global economic conditions by boosting domestic demand." For Alaron's Flynn, however, oil's gains may not prove to be sustainable, as the announcement also hinted at just how bad the global economic slowdown might turn out to be. "China has gone from having to slow their economy to having to boost it," Flynn said. "The market is still trying to determine the extent of the global economic downturn. In the meantime, we remain in a trading range, trying to break higher into the [$70 a barrel range] or breaking down in the $50s." Finding support For now, it is "important to note that the buying emerged as the spot-month December contract dipped below $60 last week," said Darin Newsom, a senior analyst at DTN. He said long-term support is between $63 and $55, so it wasn't that unusual for crude to rally. The support level will likely hold, Newsom said, but that's "not to say that the market is going to take off and run, for it certainly could move back below $60 again this week as the furor over the Chinese news cools and reality sets in. The market still needs to see/show some sort of bullish change is occurring in demand." Another big factor for oil's price gains Monday is the Organization of the Petroleum Exporting Countries' "pledge to cut production even deeper if prices are not in the $70-$90 range," Kerr said in emailed comments. "Giving that threat some teeth is the fact that the Saudis seem to be on board with the cuts." He said that it's clear OPEC is "fearful of an Obama presidency and what the longer-term impact to their industry will be." The oil cartel will likely "vigorously defend the $60 level," he said.

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