Oil rebounds from bailout failure
Prices back above $100 a barrel a day after a huge plunge on rejection of the economic rescue plan.
NEW YORK (CNNMoney.com) -- Oil settled back above $100 a barrel Tuesday, a day after Congress' failure to pass a $700 billion economic rescue plan sent prices plummeting, as investors waited for lawmakers to try again.
U.S. crude for November delivery rose $4.27 to end the day at $100.64 a barrel in New York trading.
On Monday prices dropped $10.52, or 8.9%, to $96.37 a barrel, the largest drop in dollar terms since Jan. 17 1991, when the start of Operation Desert Storm sent crude down $10.56 a barrel.
Concern about the weakening U.S. economy's effect on oil consumption has played a major factor in oil's fall from a record high of $147.27 a barrel on July 11.
In the past seven days, crude has fallen almost $25 a barrel, or 20%.
Demand: Crude sold off Monday over concern that, with no plan to keep troubled banks afloat, demand could end up seriously crippled. But investors remained hopeful that a bailout of some sort will pass Congress, after the House voted 228-205 Monday to reject the plan worked out by the Bush administration and congressional leaders.
"If we're going to go into a recession, demand for energy is going to suffer," said James Cordier, founder of OptionSellers.com in Florida. "We're simply bouncing with the idea that something will get done with the bailout plan."
After the bill failed in the House, the Dow Jones industrial average plunged 777 points, the most ever for a single day.
The Commerce Department also reported Monday that consumer spending stagnated in April. On Tuesday, the Conference Board said consumer confidence rose surprisingly in September, the highest reading since April, but the index was measured before all of last week's developments in the credit crisis.
"When you go into shutdown mode as a consumer, energy is one of the first things to go," said Cordier.
Stocks have since recovered some of that lost ground, along with oil, in the wake of the big drop.
The oil market "appears to have adopted the Dow Jones as a barometer of economic activity," said Jim Ritterbusch, president of Ritterbusch and Associates in Illinois.
The Dow had recovered more than 400 points during Tuesday trading.
Bailout take 2: "The stock markets and the oil markets are factoring in the passage of some sort of bill," said Ritterbusch.
Some even hope that a second go at a rescue plan might yield something better than if it had passed the first time around, he added.
President Bush continued to urge lawmakers to pass an economic rescue package Tuesday, saying he was "disappointed" with Monday's results, but that "this is not the end of the legislative process."
The House was adjourned for the Jewish holiday Rosh Hashanah and not scheduled to return to session until Thursday. The Senate was in session Tuesday but was not taking up the bailout.
Gas: Following the decline in oil prices, the average price of gasoline at the pump continued to trend downward, shedding a penny overnight to hit $3.633 a gallon, according to motorist group AAA. 
