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Oil Closes Above $62 on China Stimulus, Saudi Cuts

Oil prices rose on Monday as Saudi Arabia's move to cut supplies and China's launch of a $600 billion economic stimulus plan aided market volatility.

Concerns about an economic recesion had earlier pushed prices down, as General Motors shares slumped, Fannie Mae recorded a record $29 billion loss and the United States pledged further support for struggling insurer AIG .

U.S. light, sweet crude rebounded from earlier lows to rise $1.45, settling at $62.41 a barrel.

London Brent crude rose $1.80 at $59.15.

"A positive move by the Chinese to offer a major stimulus package was being offset by ongoing economic concerns, causing cross currents, providing traders with another wild ride as intraday volatility remained high," said Chris Jarvis, senior analyst at Caprock Risk Management in New Hampshire.

Oil tanker
Oil tanker

The U.S. government restructured its bailout of AIG on Monday, raising the package to a record $150 billion with easier terms, after a smaller rescue plan failed to stabilize the ailing insurance giant.

China's spending package aims to boost domestic demand and help the world's forth largest economy ride out the credit crisis, but analysts said it would take time to filter through to the energy markets.

Saudi Arabia told refiners in Asia it would cut December supplies by 5 percent, signaling its adherence to an OPEC plan to cut output.

Oil prices fell nearly 10 percent last week and dipped below $60 the previous week to their lowest level since March 2007, after a string of dismal economic reports from the United States sharpened fears of a protracted recession.

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