NEW YORK - Oil prices rose past $100 a barrel Friday, gaining for a third day as a government plan to absorb billions of dollars of banks' toxic debt emboldened investors to put money back into the markets.
Light, sweet crude for October delivery rose $2.64 to $100.52 a barrel in early trading on the New York Mercantile Exchange after earlier rising as high as $103.64.
Crude has climbed about $10 in past three days as a historic government intervention into the financial system at least temporarily halts a steep fall below the $100 level. But analysts say prices could resume their downward trend, noting that demand for energy will likely remain weak as a slumping economy leads Americans to drive less and businesses to scale back operations.
Speaking Friday, Treasury Secretary Henry Paulson said the latest rescue plan was aimed at removing troubled assets from the books of banking institutions and restoring calm to panicky financial markets after a week of intense volatility.
The move soothed skittish investors and sent stocks surging on Wall Street, giving a boost to energy and other commodities. Crude jumped nearly $5 earlier in the day but later gave back some of those gains as investors returned to the theme of falling energy demand that has depressed the market in recent weeks.
"Oil followed equities higher in a knee-jerk fashion, and now everyone is sitting back and thinking twice about it," said Stephen Schork, an analyst and oil trader in Villanova, Pa. "The euphoria is starting to fade because people realize we still have a weak economy and $100 oil in these conditions is still very expensive."
Oil prices have fallen about $50 since reaching a record $147.27 a barrel on July 11 on concern that slowing economic growth in developed countries will undermine crude demand.
Those fears deepened this week as turmoil in the U.S. financial system led to the bankruptcy of investment bank Lehman Brothers Holding Inc. and an $85 billion government rescue of insurer American International Group Inc.
"Oil demand is coming off in the U.S. regardless of what Paulson does, but we may not see the sharp falloff that the market was increasingly worried about," said Mark Pervan, senior commodity strategist with ANZ Bank in Melbourne.
Meanwhile at the pump, gas prices eased slightly as more Gulf Coast refineries came back on line following the passage of Hurricane Ike last weekend. A gallon of regular fell less than half a penny to a new national average of $3.807, according to auto club AAA, the Oil Price Information Service and Wright Express.
Nigeria's main militant group said Thursday it bombed another oil pipeline, marking a sixth straight day of stepped-up violence in Africa's oil giant.
The Movement for the Emancipation of the Niger Delta said in a statement it used high explosives to destroy the conduit run by a unit of Royal Dutch Shell PLC.
Shell officials could not immediately be reached for comment.
The militants have declared an "oil war" in the Niger Delta, where militants demanding more oil-industry funds from the federal government have increased attacks. About 40 percent of Nigeria's normal daily oil production is now off-line, severely curtailing exports.
"The focus of the market right now has switched from supply to demand," Pervan said. "So these stories will have some impact, but not as much as they had during the last six months when the market was supply-driven."
In other Nymex trading, heating oil futures rose 2.23 cents to $2.8057 a gallon, while gasoline prices gained half a penny to $2.4885 a gallon. Natural gas for October delivery fell 6.5 cents to $7.861 per 1,000 cubic feet.
In London, November Brent crude rose $1.37 to $96.56 a barrel on the ICE Futures exchange.
Associated Press writers Louise Watt in London and Alex Kennedy in Singapore contributed to this report.