Crude oil climbed on Friday as U.S. officials moved quickly to advance an economic stimulus package, diminishing fears of an economic recession in the U.S.
Oil rose for a second day after a $150 billion fiscal stimulus package was agreed to congressional and White House officials. The package must now be approved by the Senate before it reaches President Bush. Asian markets rose on the optimism. However American and European stocks dipped later amid concern over continuing problems relating to the credit crisis.
Crude futures for March rose $1.23, or 1.38 percent to $90.64 at 2:23 p.m. on the New York Mercantile Exchange. Brent Crude for delivery in March rose $1.83, or 2.05 percent to $91.16 at 2:54 on London's ICE Future Exchange.
The proposed stimulus package includes refunds for tax filers up to $600 for individuals, $1,200 for couples and families, and an additional $300 for each child. The initiative was taken in order to boost economic activity by motivating consumer spending and increase business investment.
U.S. government's resolution followed a steep interest rate cut of 0.75 percent from the Federal Reserve earlier in the week.
Oil also gained on greater demand from China. Chinese demand rose 6.4 percent in the month of December reaching its highest progress in seven months.
In addition weekly supplies data showed crude inventories rose 2.3 million barrels on the week ended last Friday.