* U.S. government crisis plans boosts markets
* Oil companies work to restore U.S. production after Ike
* Nigerian rebels attack pipeline
(Adds DOE comment in paragraph 12)
By Richard Valdmanis and Matthew Robinson
NEW YORK/LONDON, Sept 19 (Reuters) - Oil prices rose almost
7 percent on Friday to cap their biggest three-day rally in a
decade on expectations a sweeping U.S. government bailout plan
would boost liquidity across the battered financial markets.
U.S. crude <CLc1> jumped $6.67 to settle at $104.55 a
barrel, bringing gains since Wednesday to 14.7 percent --
biggest three-day surge since December 1998, when the United
States ramped up pressure on Iraq to allow arms inspections.
London Brent <LCOc1> rose $4.42 to $99.61.
"This is tracking the recovery we've seen in the capital
markets across the board on the government bailout plan. The
liquidity has come back in and it is pushing us higher," said
John Kilduff, senior vice president at MF Global.
The U.S. government launched several multibillion-dollar
programs to guarantee holdings in money-market mutual funds and
curb short-selling of stocks while developing a broader plan to
mop up toxic mortgage debt. []
The moves came at the end of an agonizing week for Wall
Street, in which investment bank Lehman Brothers <LEH.N> filed
for bankruptcy, insurer AIG <AIG.N> was bailed out by the
government and Merrill Lynch <MER.N> was forced to sell itself
to Bank of America <BAC.N>.
Investors had worried the confluence of crises severely
threatened the stability of the U.S. economy -- a factor that
helped push oil to a seven-month low of $90.51 a barrel earlier
in the 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 prices also got a boost Friday from weakness in the
U.S. dollar -- which strengthens overseas buying power in
commodities -- and disruptions of supply from the
hurricane-hit United States and from OPEC-member Nigeria.
"Traders will continue to alternate focus between the
financial markets, which could result in further demand
destruction, dollar movements as well as production out of the
U.S. Gulf of Mexico," said Gerard Burg, a resource analyst at
the National Australian Bank in Melbourne.
Some 89.2 percent of oil production in the U.S. Gulf of
Mexico -- the source of one-quarter of U.S. crude output --
remained idled Thursday following Hurricane Ike, along with
about 14 percent of the country's refined fuel capacity.
"The market had hoped we'd see a fairly quick rebound in
production from Ike, but that hasn't materialized," Kilduff
said.
U.S. Energy Secretary Sam Bodman told Reuters on Friday the
White House would not ask the International Energy Agency for a
release of emergency fuel stockpiles to deal with record low
gasoline inventories. []
Meanwhile, militants in Nigeria said they had attacked
another oil pipeline in the Niger Delta. []
The Movement for the Emancipation of the Niger Delta, which
has declared an "oil war" against the oil sector and the
military, said it used explosives to sabotage a Royal Dutch
Shell-operated pipeline at the Cawthorne Channel in Rivers
state.
(Additional reporting by Fayen Wong in Perth; Editing by
Walter Bagley)
