February 13, 2008 / 12:21 AM / 11 years ago

UPDATE 9-Oil rises as Venezuela cuts off Exxon Mobil

(Recasts, updates with Venezuela oil stoppage to Exxon Mobil; updates prices)

By Rebekah Kebede

NEW YORK, Feb 12 (Reuters) - Oil prices rose late on Tuesday after Venezuela announced it was stopping sales of crude oil top U.S. oil company Exxon Mobil Corp.

The move came in response to a legal challenge by Exxon Mobil (XOM.N) against Venezuela’s nationalization last year of a heavy oil project.

U.S. crude CLc1 rose 24 cents to $93.02 a barrel by 6:50 p.m. EST (2350 GMT), climbing into positive territory after settling the trading session 81 cents lower at $92.78 a barrel. London Brent crude LCOc1 settled 67 cents lower at $92.86 a barrel.

“This is a little bit more saber-rattling from Venezuela and the market is just beginning to realize that it is going to see more sparks from Venezuela and Exxon Mobil,” said Jim Ritterbusch, president of Ritterbusch & Associates.

On Monday, oil prices rose as Venezuelan President Hugo Chavez threatened a stoppage after Exxon won court rulings freezing $12 billion in Venezuelan assets in a fight over compensation for a nationalized project.

The U.S. government has received assurances that the world’s top oil producers could compensate for any Venezuelan disruption, a U.S. government official, who declined to be named, told Reuters. [nN12246018]

“While a disruption in short-haul Venezuelan supplies would be a blow to the U.S. economy, it would arguably be much more devastating to Venezuela itself,” said energy analyst Antoine Halff of Newedge Group.

Before Venezuela’s announcement, oil prices had been pressured by forecasts that U.S. government inventory data to be released on Wednesday would show a 2.7 million-barrel build in crude stocks in the week to Feb. 8. [POLL/O] That would mark the fifth consecutive weekly rise in crude stocks amid concerns that the slowing U.S. economy was damping oil demand.

U.S. crude prices have tumbled from record highs above $100 a barrel struck in early January as the credit crisis keeps dragging on the U.S. economy.

Analysts also forecast a 1.4 million-barrel decline in distillate stocks and a 1.8 million-barrel build in gasoline inventories. (Reporting by Matthew Robinson in New York, James Topham in Tokyo and Alex Lawler in London; Editing by David Gregorio)

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