23 Sep 2008

Oil up $US16 a barrel

9:12 pm on 23 September 2008

Crude oil prices skyrocketed during trading on Tuesday, recording the biggest one-day dollar gain on record in New York trade, boosted by the United States financial bailout plan and a decline in the dollar.

New York's main contract, light sweet crude for October delivery, soared $US16.37 a barrel, or 16%, to close at $120.92 cents.

Earlier, the New York futures contract traded as high as $US130.

The BBC reports there is uncertainty about how the US government rescue plan for the financial sector will work, causing investors to switch to perceived safe havens such as oil.

Others believe that the bail-out plan will help the economy, increasing demand for oil.

Concerns also persist about supply as production in the Gulf of Mexico is still affected by Hurricane Ike.