Oil softer but propped up by cold weather, fresh Iranian tensions UPDATE

Updates prices, adds details LONDON (AFX) - Oil was a touch softer, with falls limited by expectations of more freezing temperatures in the US Northeast and as political tensions in Iran re-emerged.At 11.56 am in London, front-month Brent North Sea crude contracts for March delivery were down 37 cents at 54.92 usd a barrel, after rising 1.17 usd to settle at 55.29 usd on Friday.Meanwhile, front-month New York light sweet crude contracts for March delivery dropped 32 cents to 55.09 usd a barrel, after rising 1.19 usd to close at 55.42 usd on Friday.Global Insight senior energy analyst Simon Wardell said while the supportive factors continue to prop up prices, further gains may be hard to come by."We've reached a level where its simply not sustaining itself, we'll probably see prices between the 50 and 55 usd level for a while," he said. At around 55 usd, oil has come a long way since hitting an all time high above 78 usd, which it touched in July last year. This year alone, prices have lost just over 10 pct of their value on account of a milder winter. Temperatures have turned lower over recent weeks, however, helping oil prices rise slightly. Private weather forecaster AccuWeather has forecast temperatures in the US Northeast, the world's largest heating oil consumer, to stay below normal for the next 5 days, lifting demand and limiting price slumps."We might see an impact of cold weather in the Energy Information Administration inventory report," said Wardell, commenting on the weekly stock report from the US, due Wednesday. Most analysts are expecting the report to show lower heating oil stocks this week as a result of the recent cold snap. Fresh geopolitical tensions from oil-rich nations Iran and Nigeria are also supporting prices. On Saturday an Iranian parliamentarian said the country had begun increasing its capacity to make nuclear bombs. Though this was later denied by an Iranian nuclear official, the statement will have no doubt brought the Iran nuclear issue back to the foreground, said Michael Davies, Sucden analyst.Further supply woes are feared from Nigeria. On Sunday militants from the Movement for the Emancipation of the Niger Delta torched a police headquarters in Port Harcourt in the Niger Delta in an attempt to free one of their leaders, added Davies."Geopolitical tensions seem to have once again caught the market's attention amid heightened violence in Nigeria, that has once again increased concern about more supply disruptions in the country," explained Davies.