Oil Jumps Above $90 After 8-Month Low

October 7, 2008 6:09 a.m. EST

Singapore (AHN) - Oil prices rebounded to above $90 Tuesday, gaining over $2 to recoup its 46 loss a day before after Australia's interest rate triggered optimism global central banks may act to arrest the credit crisis and its decline on oil demand.

On Tuesday, Australia's central bank announced a cut in its benchmark cash rate in a move aimed at pumping confidence and liquidity into the troubled global markets.

The U.S. light crude for November delivery was $2.40 higher at $90.19 a barrel after Tuesday's in electronic trading on the New York Mercantile Exchange, the first rise in five trading days. The contract fell overnight $6.07 to settle at $87.81, the lowest level since February 6.

David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney said, "Prices have moved so far, so fast. I certainly wouldn't say the bounce today is indicative that we've reached a bottom in oil prices."

The global financial troubles have sparked fears of economic meltdown around the globe and a decline in the demand for oil.

"Given the stresses and strains in the international financial system, the market is fearful of a severe international slowdown, especially in the developed countries," Moore adds.