Oil Prices Settle Higher on Italian Bond Talks

NEW YORK ( TheStreet) -- U.S.-pegged oil prices rebounded to end in positive territory driven by spread-trading opportunities and the euro gathering some strength on news that China was in talks to buy Italian bonds.

West Texas Intermediate light sweet crude oil for November delivery rose 90 cents to settle at $88.31 a barrel and the November Brent crude contract fell 95 cents to $109.98, off session lows.

News that China is engaged in talks to buy Italian bonds to rescue the country from financial turmoil brought some support to the euro and stocks, which in turn resulted in some support for crude oil.

Later though, the euro and equities showed weakness again, but WTI "held onto gains, while the products and Brent" ... "remained in negative territory -- weighed down by worries of a Greek default," said Summit Energy analyst Matt Smith.

"The European-specific worries seem the only reason for the comparative strength in WTI -- its location."

Citi Futures Perspective analyst Tim Evans said another driver of WTI's rebound Monday was traders taking advantage of spread trades, "with some traders figuring there's just better fundamental value buying crude oil for $88 rather than paying $112."

"There may also be some willingness to bet that U.S. commercial crude oil stocks will fall further in the weeks ahead, although I think that's missing the forest for the trees," Evans said.

Evans asserted that the global oil market just isn't tight right now and doesn't look like it will become tight anytime soon. "So the question to ask, isn't so much 'why buy WTI?' as it should be 'why buy oil at all?'"

SEB analyst Bjarne Schieldrop had a bearish view on Brent crude oil for the day, but cautioned that temporary improvements in sentiment could quickly lift Brent back up again.

New hurricanes entering the Gulf of Mexico's oil-producing region could also help nudge Brent crude prices higher.

Natural gas futures for October delivery fell 3 cents to settle at $3.885 per million British thermal units on expectations that temperatures will cool over the next three days.

"By the time we get to next weekend, it will clearly feel like autumn in New York City, its suburbs and most of New England, Pennsylvania and the Midwest," said Cameron Hanover analysts. "By Thursday, only Arizona, Texas and Florida look like their highs will reach into the 90s."

Oil and gas companies closed in mixed territory. EOG Resources ( EOG) rose 0.9% to settle at $86.11; Kinder Morgan Energy Partners LP ( KMP) fell 1.3% to $67.90; Apache Corporation ( APA) was down 0.4% to $94.71; Sunoco ( SUN) rose 0.6% to $37.35; Anadarko Petroleum ( APC) added 0.8% to $70.31; and Exxon Mobil ( XOM) rose 1.2% to $71.84.

Global Industries ( GLBL) shares soared 51.1% to $7.78 after the oil and gas industry services provider agreed to be bought by Technip, the France-based provider of engineering services to the energy sector, for $8 a share in cash or roughly $937 million.

The $8 a share acquisition price represents a 55% premium to Global Industries' closing share price on Sept. 9.

-- Written by Andrea Tse in New York.

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