(Adds details)
By Richard Valdmanis
NEW YORK, Feb 8 (Reuters) - Oil prices vaulted more than $3
toward $92 a barrel on Friday amid supply snags in Nigeria and
the North Sea and as traders anticipated a cold spell in the
huge U.S. Northeast heating oil market.
Dealers said an escalating legal battle between Exxon Mobil
and Venezuela over the country's recent nationalization of a
multibillion-dollar oil project was also encouraging the rally
by raising the possibility Venezuela could suspend exports.
U.S. crude <CLc1> jumped $3.64 to $91.75 a barrel by 1740
GMT, reversing most of the week's losses that had been
triggered by concern an economic slowdown would dent demand for
fuel. London Brent <LCOc1> gained $3.55 to $92.06.
"A lot of people with short positions are running away from
them, respecting the potential of this market to run back up,"
said Tim Evans, energy analyst at Citigroup Futures Research in
New York.
Royal Dutch Shell <RDSa.L> said 130,000 barrels of daily
crude oil production from Nigeria was halted because of
pipeline leaks, adding to supply disruptions from the OPEC
country caused by militant attacks.
Dealers said they were also concerned about supplies from
Britain's North Sea fields after weather-related platform
shutdowns and were watching an expected drop in temperatures in
the U.S. Northeast over the weekend that could boost heating
oil consumption.
Meanwhile, oil major Exxon Mobil launched a legal attack on
major U.S. crude supplier Venezuela, leading to the freeze of
$12 billion of the country's overseas oil assets as it pushes
for compensation for a nationalized oil project.
Venezuelan President Hugo Chavez has repeatedly threatened
to suspend oil exports to the United States and has clashed
publicly with U.S. President George W. Bush.
"The Venezuelan situation regarding the Exxon Mobil court
orders is helping the crude rally as traders are concerned it
could prompt some retaliation from Chavez," said Jim
Ritterbusch, analyst at Ritterbusch and Associates.
The rally comes against the backdrop of continued OPEC
production restrictions and recent comments from some members
in the group that it may agree to cut production at the next
scheduled meeting in March due to a weakening demand outlook.
Oil has tracked gyrations in the stock markets in recent
weeks amid widespread fears of a U.S. recession, and markets
across Europe and the United States were up on Friday.
Analysts at MF Global said: "Ultimately, the question that
market participants will have to answer is whether on not there
is going to be a recession and how deep and how long is it
going to be?"
Fear of a U.S. recession that could dampen oil demand in
the world's top consumer has pulled prices back from the record
high of $100.09 a barrel hit at the start of this year.
A stream of data released in recent days has pointed to a
recession steadily taking hold in the United States.
On Friday, the director of the Reuters/University of
Michigan consumer sentiment survey said the U.S. economy had
entered a recession that will be more painful and drawn out
than the usual downturn.
Technical analysts, who study price charts for cues to
future direction, also said that the repeated failure of oil to
sink through so-called support levels around $86 a barrel had
encouraged a bounce Friday.
(Additional reporting by Santosh Menon in London and James
Topham in Tokyo; Editing by Christian Wiessner)
