Crude oil prices surged higher on Monday as the Obama administration's latest plan to help struggling banks has boosted the markets and improved the prospects for energy demand.
Light sweet crude for May delivery rallied to end at $53.80, up $1.73 for the session. Prices hit as high as $54.05 earlier in the day, the best level since January.
The Obama administration released details Monday of its latest plan to solve the massive, debilitating banking crisis which continues to hold the financial system in its crushing grip.
The Treasury's response involves using up to $100 billion in funds from the $700 billion financial rescue plan passed in 2008 in addition to capital from private investors to generate an estimated $500 billion to purchase the toxic assets, a number that could double to $1 trillion over time, the Treasury said.
In other economic news, the National Association of Realtors reported that existing home sales rose 5.1 percent to a seasonally adjusted annual rate of 4.72 million units in February from a pace of 4.49 million units in January. Economists had expected sales to slip to a 4.45 million unit rate.
The dollar remained in a range near a 2 1/2-month low versus the euro and a one-month low against the sterling. Gold often moves opposite the dollar because of its hedge value.
Meanwhile, Nigerian unions are meeting with government officials in an effort to avoid a three-day strike that could begin on Wednesday. Two unions - the Petroleum and Natural Gas Senior Staff Association of Nigeria (Pengassan) and the National Union of Petroleum and Natural Gas Workers (Nupeng) are concerned over safety issues in the Niger Delta.
The dollar saw some weakness against the euro and sterling, but advanced against the yen after Japan's Finance Minister said that a massive government stimulus package would be necessary to prevent the current fiscal quarter from repeating the 12.1% economic contraction seen in the fourth quarter of 2008.
Traders also looked ahead to the Energy Information Administration data on weekly inventories, due Wednesday. Last week's report showed crude oil inventories increased 2 million barrels from the previous week. This was generally in-line with expectations.
However, total motor gasoline inventories unexpectedly increased by 3.2 million barrels last week. A decline of about 2 million barrels was expected.
Last week, April crude increased $4.80 a barrel despite a 55-cent frop on Friday. Prices soared $3.47 Thursday on the Federal Reserve's plan to buy as much as $1.15 trillion in bonds was revealed the day before.
At the pump, AAA data showed gasoline prices inched up to $1.956 per regular unleaded gallon. This is up from $1.91 a week ago and $1.925 a month ago, but well-below the $3.264 from one-year ago.
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