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Oil Ends Up at $94.20 as Commodities Gain

Oil ended above $94 per barrel on Monday, halting a three-day losing streak, amid a wider commodities rally -- and as the dollar's weakness and tensions involving Iran countered worries of a global economic downturn.

Oil Refinery in California
Oil Refinery in California

U.S.light, sweet crude for February delivery gained $1.51 per barrel, or 1.63%, to end Nymex trade at $94.20. That was off lows of $92.41 earlier in the session.

London Brent crude was higher.

Oil, which hit a record high of $100.09 on Jan. 3, has since mostly fallen on growing fears of a possible economic recession in the United States, which could curb demand in the world's biggest oil consumer.

Monday saw rising prices across the commodities. Gold and platinum surged to record highs, silver touched a 27-year peak and copper prices also rallied, partly helped by the dollar's slide to seven-week lows against the yen and the euro.

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For The Investor:

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"I think strong equities and strong gold have helped oil move up today," said Christopher Bellew, senior vice-president at Bache Commodities.

Analysts said tensions between Iran and the United States as well as violence in Nigeria had rekindled worries of potential oil supply disruption and also boosted prices.

U.S. President George W. Bush accused Iran on Sunday of threatening global security by backing militants and urged his Gulf Arab allies to confront the issue.

The verbal exchanges between Washington and Tehran have rekindled worries that Iran, the world's fourth-largest crude exporter, could cut oil exports to retaliate against U.S. pressure over its nuclear program.

In Nigeria, militants fighting for regional control of the country's oil-producing south detonated a remote-controlled bomb on an oil tanker on Friday, causing a big fire.

Geopolitics

It was the second rebel attack on Africa's largest oil industry in a week. Militant raids since 2006 have knocked out a fifth of the country's oil output capacity.

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Forget terror & war -- demand trumps geopolitics:

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Analysts said the oil market was caught between the opposing influences of short-term tight supply and downside risks to oil demand from a slowing economy, with geopolitical events and speculators driving prices in the near-term.

"The market is still finding its view on what's going to happen over the course of the year," said Simon Wardell, analyst at Global Insight.

The run-up to the OPEC meeting on Feb. 1 is expected to be closely watched for direction, analysts said.

The Organization of the Petroleum Exporting Countries said on Monday it would raise oil output if needed at meetings on Feb. 1 and March 5, but supply was enough for now and speculation was the biggest factor driving prices.

Crude speculators on the New York Mercantile Exchange boosted net long positions to a two-month high in the week to Jan. 8, as oil prices struck a record $100 a barrel.