Oil Prices Rise on Potential Financial Bailout

New York, NY, Sept. 22, 2008--Oil prices rose Monday as investors considered the possible impact on oil demand of a $700 billion U.S. proposal to buy bad mortgage debt.

Light, sweet crude for October delivery on the New York Mercantile Exchange rose $2.33 to $106.88 a barrel by midafternoon in Europe after falling as low as $103.35 earlier in the day. On Friday, the contract rose $6.67 to settle at $104.55 on initial hopes the rescue plan would stabilize the U.S. financial system and help boost economic growth.

U.S. congressional leaders endorsed the plan's main ideas, saying passage might occur in a matter of days. But they also want independent oversight, protections for homeowners and constraints on excessive executive compensation, House Speaker Nancy Pelosi said Sunday.

Treasury Secretary Henry Paulson pushed lawmakers, who received the package on Saturday, to approve the proposal as soon as possible.

The Federal Reserve also announced late Sunday that it granted a request by investment banks Goldman Sachs and Morgan Stanley to change their status to bank holding companies, a move that will allow the two institutions to open commercial banking subsidiaries, greatly bolstering their resources.

Traders were also watching news from Nigeria, where the country's main militant group in the southern oil region Sunday declared a unilateral cease-fire, ending the worst spate of militant attacks in years.