Oil futures record biggest one-day gain since Nov. 4 NEW YORK (MarketWatch) -- Crude-oil futures surged more than 9% Monday, gaining the most in nearly three weeks, as a weaker dollar and stronger stocks pushed commodities broadly higher. Crude for January delivery surged $4.57, or 9.2%, to end at $54.50 a barrel on the New York Mercantile Exchange. Crude hasn't rallied this much since it closed up 10% on Nov. 4. The contract jumped 11% earlier in the session to an intraday high of $55.30. The U.S. government agreed to rescue Citigroup, once the nation's largest bank, in a $326 billion plan to avoid financial collapse. Stocks rallied after the news, while the dollar fell sharply against its major rivals. "Surging stock markets following the rescue plan for troubled Citigroup have lifted sentiment and, in the process, lifted crude prices," Nimit Khamar, analyst at Sucden Research, said in a note. The depreciating dollar and potential production cuts by the Organization of Petroleum Exporting Countries also played a role in oil prices, Khamar said. In currencies trading, the dollar index , which tracks the value of the greenback against other major currencies, lost 1.6%. Dollar weakness typically spells gains in the prices of dollar-denominated commodities such as gold and oil, because they're cheaper for holders of other currencies. The greenback was overshadowed by heightened worries over the financial sector, following the government's rescue of Citigroup, analysts said. See Currencies. The government plan, however, helped boost U.S. equity markets. The Dow Jones Industrial Average surged 300. Meanwhile, shares of Citigroup (C: 5.95, +2.18, +57.8%) jumped more than 60%. See Market Snapshot. Rising stocks were raising investors' sentiment in commodities trading, analysts said. "The correlation play continues," said Zachary Oxman, a senior trader at Wisdom Financial. "The market is rallying, as is crude." Oxman also pointed out that the gains could be short-lived. "I don't see either rally holding today, and one thing I'm certain of is that this will be a very thin and very volatile week," he said. Gloomy economy Potentially putting downward pressures in oil prices, there was more gloomy news on the economic front to start the week, this time in Germany. A closely watched gauge of business sentiment in Europe's biggest economy plummeted to its lowest level in 15 years in November. See full story. U.S. existing-home sales retreated last month as the weak stock market and a poor economic backdrop caused buyers to pull back, according to the National Association of Realtors on Monday. "The drop in existing home sales and the expectation of bad news on durable-goods and consumer spending due out Wednesday have the potential to reverse any gains" in oil prices, said James Williams, an economist at energy research firm WTRG Economics. In other commodities Monday, gold futures rose more than 4% to the highest in more than five weeks. The Reuters/Jefferies CRB Index , a benchmark gauging the prices of major commodities, advanced 5.1% to 243.12 points. See Metals Stocks. Also on Nymex trading, January reformulated gasoline rose 7.3% to $1.1425 a gallon, and January heating oil gained 5% to $1.7844 a gallon. Natural gas for December delivery added 2.6% to $6.48 per million British thermal units. OPEC meeting Traders were also awaiting the meetings of the Organization of Petroleum Exporting Countries. The oil cartel is slated to meet Saturday in Egypt and again on Dec. 17 in Algeria. Venezuela's Oil Minister Rafael Ramirez said Sunday the cartel should reduce production by 1 million barrels a day at its Nov. 29 meeting, adding that the cuts should take effect before the end of the year, according to media reports. Separately, Reuters reported that Iran's OPEC Gov. Mohammad Ali Khatibi said Monday the cartel should cut output further since previous supply cuts have not been successful in halting the big slide in prices. "Gains have been limited as many market participants fear the magnitude of any OPEC cut will not be enough to counter the bearish sentiment and the fall in demand, which is continuing to deteriorate," Sucden Research's Khamar said. The cartel needs to show its willingness to continue cutting output in line with falling demand if it wants to stabilize prices, he said.

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