NEW YORK, Feb 22: Oil rose to near $99 a barrel on Friday as an incursion into Iraq by Turkish troops and cold weather in the US Northeast outweighed concerns about mounting problems in the US economy.

US crude traded up 66 cents to $98.89 a barrel by 1742 GMT, off a high of $99.37 earlier in the session, as snow blanketed the US Northeast and boosted heating oil futures. London Brent crude rose 74 cents to $96.98.

“The heating oil market has been supportive,” said Eric Wittenauer, analyst at AG Edwards in St. Louis.Oil surged to a record high $101.32 on Wednesday on expectations Opec could maintain or reduce output at its March meeting. The rush of speculative buying from funds seeking a hedge against inflation pushed oil near the inflation-adjusted high of $102.53 hit in April 1980.

Concerns about the economic health of the United States has helped temper gains in recent weeks, as gasoline demand in the top consuming country has shown signs of weakening under the pressure of the mortgage crisis and the credit crunch.

US inventories have swelled, with crude stockpiles up 4.2 million barrels last week while gasoline inventories hit 14-year highs.

While demand from emerging economies such as China and India keep supporting crude prices, analysts have warned of the effects of a potential US recession.

“With oil demand growth risks skewed to the downside in the US, we believe there is a growing risk that oil prices are now entering overbought territory,” Deutsche Bank analysts said in a research note.

Investment bank Merrill Lynch said the United States was in a recession that could be much worse than the one it faced in 2001, closer to the sharper economic slump of the 1990s.

—Reuters