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Oil rises, buoyed by supply risks

By Agencies

Oil advanced for a fourth day on Monday, supported by an escalating row between OPEC member Venezuela and oil major Exxon Mobil.

The quarrel between Venezuela and Exxon has helped oil bounce back from this year's low of $86.11, but worries about a slowdown in top oil consumer the United States could prevent a return to record highs of $100 a barrel struck in early January.

US crude was up 55 cents at $96.05 a barrel by 1.45pm GMT. On Friday it had closed 4 cents higher at $95.50, after touching a one-month high of $96.67.

London Brent crude rose 36 cents to $94.99.

"Oil prices are remaining at firm levels, buttressed by perceived supply side risks," David Moore, a resource analyst at the Commonwealth Bank of Australia, said in a research note.

There is also evidence of investors moving back into oil, which could point to further price strength.

Speculators on the New York Mercantile Exchange, for example, increased net long positions last week, according to data from the Commodity Futures Trading Commission released on Friday.

Net crude long positions increased to 39,922 in the week ending February 12, up from to 27,448 in the previous week.

The data showed large speculative funds ending a four-week run of reductions in net long positions in oil futures, according to Olivier Jakob of oil consultants Petromatrix.

"Investment flows have improved, with large speculators increasing their net length across oil commodities," he said.


Venezuelan President Hugo Chavez said on Sunday the state could sue Exxon for unpaid oil taxes, and repeated threats to cut oil sales to the United States if Washington attacked the South American country.

Exxon said it was still prepared to talk to Caracas about an amicable settlement after recently winning court orders to freeze $12 billion (Dh44bn) in Venezuelan assets to ensure compensation for an oil project Chavez nationalised last year.

"We have indicated to the Venezuelan government that we're still prepared to talk, but should that not be the case we'll protect our rights," Robert Olsen, Chairman of Exxon told Reuters in an interview.

Venezuela, one of the largest crude exporters to the US, already cut shipments to Exxon last week after the firm won the $12 billion asset freeze.

The head of the International Energy Agency has said the impact of Venezuela's cut off in crude oil exports would likely be limited and probably not require the release of global emergency crude stockpiles.

Oil producers in the Middle East have also assured the US they could compensate for a supply disruption if Venezuela slows exports.

Data on the US economy has shown the mood of American consumers deteriorating in February to a point that could signal a recession.

But US data has also suggested bubbling price pressures, raising the possibility of stagflation - simultaneously slowing growth and rising inflation. (Reuters)