Oil rose over $3 to top $80 a barrel on Monday, recouping some of previous session's 10 percent loss, in a relief rally as leaders in the United States and euro zone took steps to pull the banking sector away from a deeper collapse, Reuters reported.
Countries from Europe to Australia rushed out plans on Sunday to shore up their banks, trying to stem a crash in markets by pledging to back lending, buy stakes in financial institutions and take other measures to help banks through the worse financial crisis since the 1930s.
U.S. crude for November delivery was up $2.53 at $80.23 a barrel by 11:53 p.m. British time, after rising by as much as $3.07 or about 4 percent at the start of electronic trading.
The contract plunged $8.89 to settle at $77.70 a barrel on Friday, the lowest levels since September 10, 2007.
London Brent crude rose $2.28 to $76.37 a barrel on Monday.
"The announcements from over the weekend would have some positive effects on the markets, even though it's still in very early days at this stage to say if they would put an end to the financial crisis," said David Moore, a commodities analyst at the Commonwealth Bank of Australia.
The U.S. Federal Reserve will consider all options in seeking to stabilise credit markets in a period that may bring negative growth, Dallas Fed President Richard Fisher said on Sunday.
In Europe, government leaders agreed on commitments to provide capital for banks caught short of funds because of frozen money markets and to insure or buy into new debt issues, a summit statement said.
The news lifted U.S. stock futures on Sunday evening, after they had plunged more than 18 percent last week in their worst-ever weekly fall as panicked investors dumped stocks on fears that frozen credit markets would push the global economy into recession.
Slumping demand in the United States and other developed economies sent oil prices off their July peak of above $147 a barrel, reached after surging consumption in emerging markets such as China sent commodities on a six-year rally.
The price fall has caused some OPEC members to call for a cut in production levels, and the cartel has agreed to hold an emergency meeting in Vienna on November 18, to discuss the impact pf the global financial crisis on the oil market.
Iran is set to push for a cut in oil output at an OPEC emergency meeting in November, its oil minister said in comments published on Sunday, adding investment conditions in the oil industry would be severely hit unless OPEC acted decisively to arrest the current fall in oil prices.