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Sunday, December 16, 2007

Oil rises on storm and and Turkish Bombing of Kurdish rebels

By Jonathan Leff 2 hours, 48 minutes ago

SINGAPORE (Reuters) - Oil prices rose on Monday following a two-day, $3 slide as a U.S. winter storm and Turkish bombing of Kurdish rebels in northern Iraq countered concerns about a weaker U.S. economy.

U.S. light, sweet crude for January delivery, which expires on Tuesday, rose 52 cents to $91.79 a barrel by 0239 GMT, having lost nearly $1 on Friday and more than $2 the day before.

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A snowstorm heading into New England lent support to prices, as traders factored in higher household use in the top heating oil consuming region. The storm brought snow, freezing rain and high winds to the U.S. Northeast at the weekend.

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Turkish warplanes targeting Kurdish rebels bombed northern Iraq on Sunday, while up to 100,000 Turkish troops are near the Iraqi border, threatening a major operation that analysts fear could destabilize the region.

Analysts have said the action is not likely to affect oil shipments through Iraq's northern pipeline to the Turkish coast, which has only operated sporadically since the 2003 war, but fear it could further unsettle the rest of the oil-rich Middle East.

"I think this may be a bullish factor for the market," said Ken Hasegawa of Fimat Japan Inc.

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"The macro-economic backdrop remains complicated," said Commonwealth Bank of Australia analyst David Moore.

Oil prices have been dragged back from last month's record high $99.29 a barrel by growing concerns about the U.S. economy. A concerted effort last week by global central banks to inject more liquidity into credit markets failed to erase those worries.

Friday's data came amid signs U.S. oil demand growth is being clipped by the wider economic problems stemming from the global credit crunch, prompting OPEC to maintain its forecast for oil demand growth of only 1.3 million barrels per day next year.

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One fresh supply risk arose at the weekend after an influential rebel commander in Nigeria's oil-producing Niger Delta ordered the suspension of peace talks with the government, although there was no immediate sign of a resumption in the attacks that have crippled output since 2006.

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