Crude oil climbed again in early trading Thursday, touching above the $102 a barrel mark before easing back. Light sweet crude for October delivery moved to $99.89, up $2.73 after earlier hitting as high as $102.24. The rally has erased the sharp decline from earlier in the week.

Traders are moving towards commodities as a hedge in an effort to avoid exposure to plunging equities. On Thursday, the Federal Reserve and several other central banks teamed up to inject $247 into money markets in an effort to calm the recent financial crisis. This came on the heels of weak earnings reports from Goldman Sachs and Morgan Stanley (MS), the only two remaining big investment banks on Wall Street following the departure of Lehman Brothers and Merrill Lynch as viable, independent companies.

The FOMC has approved a $180 billion expansion of its swap lines, with the facility with the ECB increased by $55 billion to up to $110 million and the Swiss National Bank by $15 billion to up to $27 billion. Additionally, the Fed has authorized new facilities with the Bank of Japan, the Bank of England and the Bank of Canada, providing U.S. dollar liquidity up to $60 billion, $40 billion and $10 billion, respectively to each of these banks.

On the economic front, the Department of Labor report showed that jobless claims rose to 455,000 from the previous week's unrevised figure or 445,000. The increase came as a surprise to economists, who had been expecting jobless claims to edge down to 440,000. With the increase, weekly jobless claims came in just below the six-year high of 457,000 set in the week ended August 2nd.

Oil surged on Wednesday and recouped much of a two-day slump that took prices to a multi-month low. Light sweet crude for October delivery ended the day at $97.16, up $6.01 on the session. Traders considered Energy Information Administration data that showed a fourth straight drop in weekly inventories.

Crude oil inventories decreased by 6.3 million barrels in the week ended Sept. 12. Experts were calling for a drop of about 3.5 million barrels. Meanwhile, motor gasoline inventories decreased by 3.3 million barrels last week, which was in-line with analysts' expectations.

Oil had dropped nearly $10 on Monday and Tuesday as troubles in the U.S. financial sector could reduce energy demand. On a long-term basis, oil had lost more than $55 from its record high of $147.27, reached on July 17.

Crude oil closed sharply lower for the second straight day on Tuesday and ended below the $92 mark. Oil fell as low as $90.55 in the opening minutes of the session. On Tuesday, Goldman Sachs cut its three-month crude oil to $115 a barrel, down from $149 and dropped its six-month outlook from $142 to $125. The firm also lowered its 2009 average price forecast to $123, down from $148.

Crude oil plunged more than 5 percent on Monday to move below the key $100 level for the first time since early April.

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