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Mon 18 Feb 2008 11:01 AM

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Oil hovers above $95

Concerns over escalating row between Venezuela and the US weighs on investor sentiment, pushes prices higher.

Oil hovered above $95 a barrel on Monday, as investors weighed the effects of a slowing US economy against an escalating row between Opec member Venezuela and oil major Exxon Mobil.

US light crude for March delivery rose 16 cents to $95.66 a barrel by 0609 GMT. Oil closed 4 cents higher at $95.50 on Friday, after touching a one-month high of $96.67.

London Brent crude rose 26 cents to $94.89.

"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.

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

Venezuela, one of the largest crude exporters to the US, had already cut shipments to Exxon Mobil last week after the US oil firm won court orders to freeze over $12 billion of Venezuela's assets in a row over nationalisation of Exxon assets in Venezuela.

The head of the International Energy Agency (IAE) said last week 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.

While a quarrel between Venezuela and Exxon has helped oil prices bounce back from this year's low of $86.24, analysts said worries about the US economy would continue to cap oil's gains.

US economic data on Friday showed the mood of American consumers deteriorating in February to a point that could signal a recession.

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

Crude speculators on the New York Mercantile Exchange 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. (Reuters)

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