SINGAPORE -- Oil prices rose slightly in Asian trade Wednesday but the market was dominated by worries that a US government rescue plan may not be enough to save the economy from slower growth and falling energy demand, dealers said.
New York's main contract, light sweet crude for November delivery, rose 46 cents to $107.07 a barrel after a drop of $2.76 to $106.61 at the close of floor trading Tuesday at the New York Mercantile Exchange.
On Monday, the price soared $16.37, the benchmark contract's biggest ever one-day gain, to close at $120.92.
Brent North Sea crude for November delivery rose 49 cents to $103.57 a barrel. The contract dropped $2.96 Tuesday to settle at $103.08 in London after a jump of $6.43 on Monday.
David Johnson, an oil analyst with Macquarie Securities, said prices will be volatile but the dominant factor is fear for the economic future.
"Despite all the rescue packages that we've seen, people are still not convinced that they are going to drag us out of the mire," Johnson said from Hong Kong.
Traders fear that depressed economic activity will extend into next year and lead to weaker demand for oil, and lower prices, he said.
Oil prices have already fallen heavily from record levels above $147 in early July, on worries the global economy is slowing and causing a dent in energy demand.
Federal Reserve chairman Ben Bernanke and Treasury Secretary Henry Paulson testified before Congress on Tuesday after proposing a bailout of up to $700 billion worth of tainted mortgage-related assets at the root of a global financial crisis.
They argued that lawmakers must pass the emergency measure quickly or put the entire US economy at risk.
But congressmen have expressed reservations over what would be the largest government financial intervention since the 1930s Great Depression. The two finance chiefs were to face more grilling Wednesday at a hearing of the House of Representatives Financial Services Committee.
Michael Davies at the Sucden brokerage in London said concerns about the US toxic debt bailout plan are growing and initial optimism over it is unfounded.
"The US plans are still far from certain and will not help the damage to the real economy already done by the recent turmoil, which we are yet to see," he said.
US media reported Tuesday that the Federal Bureau of Investigation is probing allegations of fraud by 26 Wall Street firms including several investment giants whose collapse sent world markets into turmoil.
