buddy, O2 sensor has NO FUNCTION when the car is cold! The ecu ignores inputs from o2 sensor till engine reaches a certain temperature - in your case when the needle reaches middle of Hot and Cold. So o2 sensor is okay.
The problem as zulfiqar bro said, injectors leaking into the intake, or fuel system overpressurized (faulty fuel pressure regulator and/or pump?)
Also, I would advise to replace the coolant temperature sensor - if it is extremely faulty then that could be contributing to your problems.
so check:
- injectors (they have to take them out and test them)
- fuel pressure regulator/ pump
- coolant temperature sensor.
Do these, then report back - and tell us how the problem was solved.