Oil prices rise on deal to buy Credit Suisse

SINGAPORE Reuters -- Oil prices rose on Monday after UBS struck a deal to buy Credit Suisse and some of the world's largest central banks to reassure and stabilise global financial markets.

After a near 12% loss last week, its biggest weekly fall since December, the price of crude rose 35 cents, or 0.5%, to $73.32 a barrel by 0007 GMT.

U.S. West Texas Intermediate crude was at $67.11 a barrel, up 37 cents, or 0.6%, after a 13% decline last week, its biggest since April.

Switzerland's largest bank, UBS, has announced late on Sunday it will buy the country's No. Credit Suisse is a historic deal with 2 lenders. Following the announcement, the US Federal Reserve, European Central Bank and other major central banks pledged to enhance market liquidity and support other banks.

CMC Markets analyst Tina Teng said that the Swiss bank deal and central banks measures to inject liquidity are restoring market confidence and has led to a rally in risk assets, including crude markets.

She said that if the Fed softens its tone on rate hikes, there may be a relief rally in broad markets.

Some analysts say the central bank should pause its policy tightening for now but be ready to raise rates later in the future, as investors are pricing a 60% probability that the Fed will raise rates by 25 basis points on Wednesday.

A slowed down in interest rate hikes could make dollar-denominated commodities more affordable for holders of other currencies.

Goldman Sachs cut its forecasts for Brent crude after prices plunged on banking and recession fears.