NEW YORK --- Oil prices climbed back above $80 a barrel Monday, rebounding from the 13-month low of last Friday, the Associated Press reported.
Investors were reportedly lured back into equity and commodities markets by global efforts to rescue world financial markets, a weaker dollar and expectations that OPEC countries may tighten production. Prices have fallen about 45 percent since setting a record $147.27 on July 11, AP reported.
Last week, crude fell more than $16 to levels not seen since September 2007. But investors appeared calmer Monday after European leaders agreed to new measures aimed at strengthening the financial sector, including debt guarantees, recapitalizing banks and new oversight measures.
Meanwhile in Washington, Treasury Secretary Henry Paulson said his office would work quickly to implement a $700 billion bank rescue plan, including a new measure to buy equity in struggling banks. The Dow Jones industrial average shot up over 500 points in midday trading, AP reported.
"The oil market really can't ignore these huge daily price swings in the stock market. When the stock market settles down, we can go back to trading oil on fundamentals rather than just broadbased economic deterioration," Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Ill., told AP.
Light, sweet crude for November delivery rose $3.69 to $81.39 a barrel on the New York Mercantile Exchange, after earlier rising as high as $82.52. The contract fell Friday $8.89 to $77.70, the lowest price since Sept. 10, 2007. In London, November Brent crude rose $2.12 to $76.21 a barrel on the ICE Futures exchange.
Investors are watching for signs that the Organization of Petroleum Exporting Countries may decide to cut production at a meeting in Vienna on Nov. 18. This weekend, Iranian Oil Minister Gholam Hossein Nozari called for stability in the oil market, citing a decline in oil demand because of the global economic recession.
James Williams, who publishes the Energy Economist newsletter from London, Ark., told the Los Angeles Times last week he believes the cost of oil could fall to the $60 level, even if OPEC decides to cut production. "Recessions trump OPEC cuts," he said.
The last time oil futures sold below $60 a barrel was March 2007, when the cost of gasoline averaged $2.61 a gallon nationwide, the L.A. Times reported.
Andrew Lipow, an oil industry consultant, told the L.A. Times that he expects the national average price for gasoline to drop below $3 a gallon within a month.