Oil prices rose above USD 83 a barrel on Tuesday in Asia as panic selling over a global financial crisis eased after the US and Europe pledged to pump capital into ailing banks.
Light, sweet crude for November delivery was up USD 2.38 to USD 83.57 a barrel in electronic trading on the New York Mercantile Exchange by midday in Singapore.
The contract rose overnight USD 3.49 to settle at USD 81.19.
Investors have cheered signs that the US and European governments plan to inject capital into major banks.
Tokyo's benchmark Nikkei 225 index jumped 13 per cent on Tuesday after the Dow Jones industrial average yesterday gained more than 11 per cent, its biggest one-day rally since 1933.
"There's some confidence from Western governments buying stakes in banks, and the financial panic seems to have subsided a little," said Jonathan Kornafel, Asia director for market maker Hudson Capital Energy in Singapore.
"Crude oil certainly overshot on the downside." Oil fell to a 13-month low on Friday, settling at USD 77.70.
Crude is down 44 per cent since reaching a peak in mid-July.
The US plans to spend an initial USD 250 billion of a USD 700 billion bailout buying stock in private banks, industry and government officials said on Monday night.
President George W Bush planned to announce the details later in the day on Tuesday.
That followed signals that European governments were putting up about USD 2 trillion to safeguard their own banks.
Although the massive rescue plans boosted short-term sentiment, the scale of the bailout underscores the current weakness of the global financial system and the likelihood of a prolonged economic downturn, Kornafel said
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