MercoPress. South Atlantic News Agency

Jittery markets hike oil price which settles at 120 US dollars

Reflecting uncertainties about the US government 700 billion US dollars bail out plan and its consequences on the US dollar, oil prices on Monday jumped briefly 25 US dollars before falling back to 120.97 US dollars a barrel

Light, sweet crude for October delivery jumped as much as 25.45 to 130 US dollars a barrel on the New York Mercantile Exchange before settling at 120.92, up 16.37 US dollars. The rally shattered crude's previous one-day price jump of 10.75, set June 6. The Nymex temporarily halted electronic crude oil trading after prices breached the 10 dollars daily trading limit. Trading resumed seconds later after the daily limit was increased. In other trading gold prices shot up more than 44.30 to settle at 909 US dollars an ounce, and other safe-haven commodities also rallied, underscoring investors' uncertainly about the direction of the world economy and their fear of more turmoil ahead. Crude has gained about 30 dollars in a dramatic four-day rally that has at least temporarily halted oil's steep two-month slide below 100 US dollars. At this rate, crude is within striking distance of its all-time record of 147.27, reached in July. Anxiety over the US financial crisis and plan to absorb billions of dollars of banks "toxic" mortgage-related securities sent US stocks sharply lower Monday, although overall markets were calmer than last week. Investors fear that the US government will have to dramatically increase borrowing to pay for the mammoth rescue effort, an inflationary move that could further devalue the dollar and trigger another wave of safe-haven buying in investments like commodities. The Euro rose to 1.4796 USD in afternoon trading, up from the 1.4470 on Friday. A weak greenback was a catalyst for the commodities boom of the past year, and analysts said large investment funds were expected to pour money back into the sector. US congressional leaders endorsed the plan's main thrust, saying passage might occur in a matter of days. But they also want independent oversight, protections for homeowners and constraints on excessive executive compensation, House Speaker Nancy Pelosi said Sunday. US Treasury Secretary Henry Paulson pushed lawmakers, who received the package on Saturday, to approve the proposal as soon as possible. US President George Bush has publicly urged Congress to move forward with the package given the seriousness of the situation.