Oil jumps above $78 on emergency rescue deal

US oil prices rallied more than $3 per barrel to above $78 on Monday after policymakers agreed a rescue package worth around $1 trillion to stabilise world financial markets and resolve the Greek debt crisis.

The size of the package surprised dealers and boosted confidence that oil demand will recover this year.

The package consists of 440 billion euros in guarantees from euro area states, plus 60 billion euros in a European stabilisation fund that could be disbursed to help euro zone states if needed. A further 250 billion euros would come from the International Monetary Fund.

Global equities and the euro rebounded and the dollar index slipped as news of the rescue package helped calm risk aversion. Benchmark US light crude oil futures for June delivery were up $3.06 at $78.17 a barrel by 0853 GMT. ICE Brent crude for June also jumped $3.17 to $81.44.

OPEC Secretary-General Abdullah al-Badri said he expected the emergency package to boost oil prices back up above $80 a barrel, but warned of wild price swings as the global economy continued on its path to recovery.

"I think the market will look positively at this development," Badri told reporters on the sidelines of the Arab Energy Conference. "I assume prices would go back to normal, where it was ... back up to $80 plus."