By Edward McAllister

Concerns about an economic recession had earlier pushed prices down, as General Motors shares slumped, Fannie Mae recorded a record $29 billion loss and the United States pledged further support for struggling insurer AIG.

U.S. crude rebounded from earlier lows to rise $1.45 to $62.49 a barrel by 2:42 p.m. EST. London Brent crude rose $1.80 at $59.15.

"A positive move by the Chinese to offer a major stimulus package was being offset by ongoing economic concerns, causing cross currents, providing traders with another wild ride as intraday volatility remained high," said Chris Jarvis, senior analyst at Caprock Risk Management in New Hampshire.

The U.S. government restructured its bailout of American International Group Inc on Monday, raising the package to a record $150 billion with easier terms, after a smaller rescue plan failed to stabilize the ailing insurance giant.

China's spending package aims to boost domestic demand and help the world's forth largest economy ride out the credit crisis, but analysts said it would take time to filter through to the energy markets.

Saudi Arabia told refiners in Asia it would cut December supplies by 5 percent, signaling its adherence to an OPEC plan to cut output.

Oil prices fell nearly 10 percent last week and dipped below $60 the previous week to their lowest level since March 2007, after a string of dismal economic reports from the United States sharpened fears of a protracted recession.

(Additional reporting by Gene Ramos and Robert Gibbons in New York, Fayen Wong in Perth and Barbara Lewis and Alex Lawler in London; Editing by John Picinich)