February 14, 2008 / 1:02 AM / 10 years ago

Oil surges on supply worries and economic data

<p>Oil rigs and platforms are seen at Maracaibo's lake near the western city of Maracaibo, Venezuela, January 2, 2008. REUTERS/Isaac Urrutia</p>

NEW YORK (Reuters) - Oil surged more than 2 percent to top $95 a barrel on Thursday, spurred by supply concerns and strong economic data from giant consumers the United States and Japan.

The rise added to gains earlier in the week that came amid an escalating legal battle between Exxon Mobil Corp (XOM.N) and Venezuela over the nationalization of a giant heavy oil project last year.

U.S. crude settled up $2.19 at $95.46 a barrel after reaching $95.60 in earlier activity, the highest level since January 10. Brent crude gained $1.77 to $95.09 a barrel.

Venezuela, one of the largest crude exporters to the United States, cut off crude shipments to Exxon after the U.S. oil major won court orders to freeze over $12 billion in the OPEC nation’s assets.

Energy Secretary Sam Bodman said on Thursday he did not expect Exxon Mobil to have trouble replacing Venezuelan oil, but added the nation’s Strategic Petroleum Reserve would be available if needed.

“My general understanding is we don’t expect there to be a big problem but we stand ready to make it (strategic reserve) available if it is required,” he told Reuters in Orlando, Florida.

The Exxon embargo came after Venezuelan President Hugo Chavez, a critic of President George W. Bush, threatened to cut off all shipments to Venezuela’s main customer over the legal challenge, adding to a string of supply worries in the Atlantic Basin.

“A number of supply-driven factors have reminded the market of how thin spare capacity of production really is -- Nigeria, North Sea glitches and geopolitical tension,” said Harry Tchilinguirian of BNP Paribas.

Exports from oil cartel OPEC were expected to begin sliding seasonally as well, with consultancy Oil Movements forecasting a 140,000-barrels-per-day (bpd) drop in the four weeks to March 1. Lloyd’s Marine Intelligence Unit reported OPEC seaborne exports down 279,00 bpd in January versus December.

Further support for oil prices came from U.S. economic data showing fewer jobless benefits claims and a surprise rise in retail sales. Japan’s economy expanded by 0.9 percent in the fourth quarter, more than double forecasts.

Concerns that U.S. economic problems would cut oil demand growth in the world’s top consumer knocked oil off record highs above $100 a barrel struck in early January.

Federal Reserve Chairman Ben Bernanke told a Senate committee the U.S. economic outlook had worsened and that the central bank would act as needed to support growth.

Additional reporting by Peg Mackey and Alex Lawler in London and Osamu Tsukimori in Tokyo; editing by Jim Marshall

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