KEY POINTS:
Oil prices rose yesterday following a two-day, $3 slide as a US winter storm and Turkish bombing of Kurdish rebels in northern Iraq countered concerns about a weaker US economy.
US light, sweet crude for January delivery which expirestoday, rose 52 cents to $91.79 a barrel by 0239 GMT, having lost nearly $1 on Friday and more than $2 the day before.
London Brent crude rose 51 cents to $92.20 a barrel.
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 US Northeast at the weekend.
Front month heating oil futures rose by 0.8 per cent to $2.6289 a gallon after closing on Friday at a more than $18 a barrel premium to crude, the highest in over two years.
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 destabilise the region.
Analysts have said the action is not likely to affect oil shipments through Iraq's northern pipeline, 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.
Prices fell on Friday after data showed US consumer prices rose by their highest in more than two years in November due to surging energy costs and a host of other prices, damping prospects for further interest-rate cuts and once again highlighting risks to the economy.
That data also helped the US dollar to its biggest daily rise against the euro in almost three years, adding further pressure to the dollar-denominated commodities complex.
But analysts said the outlook was far from clear, pointing to the 0.4 per cent rise in industrial output last month after a 0.6 per cent drop in October as evidence of some resilience.
Oil prices have been dragged back from last month's record high $99.29 a barrel by growing concerns about the US 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 US 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.
But the International Energy Agency, adviser to 27 industrial countries, was more upbeat and raised its growth projection to 2.1 million bpd due to growing demand in the Middle East, highlighting the divergence of views over next year's outlook.
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.
- REUTERS
