Oil up on Bush plan

21 January 2008

A three-day slump in crude oil prices ended on Friday after the US government outlined an economic stimulus plan.

Recent days have seen the publication of a succession of reports containing data indicating that the US economy is slowing down.

In an attempt to stave off a recession President George Bush announced his intention to offer personal tax rebates and corporate incentives worth around $150 billion (£77 billion) in the hope they will stimulate the economy.

Concerns about the American economy have seen oil prices plummet from the record highs of the early days of the month, but news of the president's proposal saw US crude gain 44 cents to close at $90.57 a barrel and Brent crude climb 48 cents to settle at $89.23.

Despite the gains traders and analysts were split about whether President Bush's plan would be enough to boost the economy and ensure demand for oil remains strong.

Tim Evans of Citigroup told Reuters: "The good news is that the government is taking action that may result in a firmer economic performance six months from now. The bad news is that this rush to action confirms how fragile the economy currently is."