* U.S. proposed a $700 billion bank bailout plan
* Nigerian rebels declare unilateral ceasefire
* Oil firms, refineries to restore U.S. production after
Ike
By Fayen Wong
PERTH, Sept 22 (Reuters) - Oil fell nearly $1 to around
$103 a barrel on Monday, giving back some of last week's
massive gains, as investors considered United States' proposed
$700 billion bank bailout and as Nigeria's main militant group
began a unilateral ceasefire.
Sweeping government measures to rescue the financial system
and restore confidence in shaky markets spurred a huge relief
rally across markets on Friday, when oil rose almost 7 percent
to cap its biggest three-day rally in a decade.
But analysts said uncertainty about the workings of the
rescue plan as well as concerns about the impact of the recent
financial turmoil on energy demand were putting downward
pressure on oil prices.
U.S. light crude for October delivery <CLc1> fell $0.77 to
$103.78 a barrel by 2320 GMT, after falling as much as $1.20
earlier.
The contract jumped $6.67 to settle at $104.55 a barrel on
Friday, bringing gains since Wednesday to 14.7 percent --
biggest three-day surge since December 1998.
"There might have been too much optimism on Friday and now
prices are settling back. I think the market is still uncertain
how the U.S. rescue plan is going to turn out and its impact on
oil demand and so on," said David Moore, a commodities analyst
at the Commonwealth Bank of Australia in Sydney.
"The ceasefire in Nigeria is also putting downward pressure
on prices."
The Bush administration and Congress on Sunday ramped up
talks on an unprecedented $700 billion bank bailout as they
battled the clock to prevent further financial turmoil that
risks hurtling the economy into a deep and damaging recession.
[]
Ructions in the U.S. financial system, which saw the
collapse of investment bank Lehman Brothers <LEH.N>, insurer
AIG <AIG.N> bailed out by the government and Merrill Lynch
<MER.N> forced to sell itself to Bank of America <BAC.N>, have
raised questions about the stability of the U.S. economy -- a
factor that helped push oil to a seven-month low of $90.51 a
barrel last week.
Oil prices remain sharply down from their peak above $147 a
barrel in mid-July, pressured by mounting evidence that high
energy costs and economic troubles are undercutting global fuel
consumption.
Oil was also weighed down by news that Nigeria's main
militant group had begun a unilateral ceasefire on Sunday after
a week of clashes with the military and attacks on oil
installations which cut output in Africa's top producer.
[]
The week-long attack on oil facilities forced Shell to
declare on Saturday a second force majeure on crude oil
shipments from Nigeria. []
Analysts said the restart of oil and gas production in U.S.
Gulf of Mexico as well as refineries in Texas city were also
responsible for oil's retreat.
About a quarter of U.S. Gulf of Mexico natural gas output
and 11 percent of oil production were back on line Friday as
recovery from Hurricanes Gustav and Ike continued, the U.S.
Minerals Management Service said. []
Eleven U.S. oil refineries along the Gulf Coast with 2.202
million barrels per day in refining capacity were also back to
normal operations as of Friday after being shut by recent
hurricanes. []
(Reporting by Fayen Wong; Editing by Louise Heavens)
