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OIL: Crude oil futures creep higher after volatile day

Oil futures inched higher on Friday, giving up much larger earlier gains as traders sold to book profits from crude's recent 10 percent price rally.

Volatility was the day's watchword, as prices alternated on mixed news from OPEC and competing views about the US economy and demand for oil.

The Organization of Petroleum Exporting Countries trimmed its demand forecasts for this year by 100,000 barrels a day but hinted that it may cut production if global supplies of crude continue to rise, Dow Jones Newswires said.

"It's always on the mind of traders what OPEC is going to do," said Addison Armstrong, director of exchange traded markets at TFS Energy Futures LLC in Stamford, Connecticut.

Earlier in the week, prices rose on Venezuelan President Hugo Chavez's threat to cut off oil shipments to the US in retaliation for Exxon Mobil Corp's success in convincing courts in the US and Europe to freeze Venezuelan assets.

Exxon has taken Venezuela to court over last year's nationalization of an oil field.

"I think we're just finally coming back down to earth," said Phil Flynn, an analyst at Alaron Trading Corp in Chicago.

In recent days, many analysts have questioned oil's price strength in the face of falling demand.

Light, sweet crude for March delivery rose US$0.04 to settle at US$95.50 on the New York Mercantile Exchange after alternating frequently between positive and negative territory. Oil prices have risen more than US$8 in little more than a week. In London, April Brent crude futures fell US$0.53 to US$94.63 a barrel on the ICE Futures exchange.
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