Crude oil prices turned lower amid choppy trading on Monday morning as May took over as the front-month contract.
Light sweet crude for May delivery dropped to $51.95, down 12 cents for the session. Prices hit as low as $51.62 and as high as $52.60.
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.
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 drop 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.
In big news on the corporate front Monday morning, Canadian oil companies Suncor Energy (SU.TO) and Petro-Canada (PCA.TO) announced Monday that the companies have agreed to merge in an all-stock deal. Both companies expect the proposed merger to be completed in the third quarter of 2009. The combined entity will operate corporately and trade under the Suncor name.
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