Oil prices held firm above $73 a barrel on Monday, following reports of oil pipeline attacks in major exporters Iraq and Nigeria over the weekend, and as cold weather in the United States and Europe raised the prospect of increased fuel demand.
U.S. crude futures for January delivery, in their final day of trading before expiry later Monday, rose 66 cents to $74.02 a barrel by 11:25 a.m. EST, after settling up 73 cents on Friday. The more actively traded February contract was at $74.86. In London, Brent crude was up 33 cents at $74.08.
Gains were limited by thin trade during a holiday-shortened week and ahead of Tuesday's meeting of the Organization of the Petroleum Exporting Countries in Luanda, Angola on Tuesday.
Nigerian militants said on Saturday they had carried out their first attack on an oil pipeline since the government offered them amnesty in October ahead of peace talks, which have faced delays. The alleged attack on a Royal Dutch Shell pipeline was not immediately confirmed.
"The pipeline news is certainly something we'll be monitoring. The Nigerian attack isn't confirmed, but this raises questions about whether we'll see stability there, or we'll go back to four pipeline attacks every month," said Tim Evans of Citi Futures Perspective in New York.
An Iraqi pipeline linking Kirkuk to Turkey's Ceyhan port stopped shipping its typical daily volume of 500,000 barrels of crude late Saturday. Iraqi officials said they suspected sabotage of the pipeline, which was unlikely to resume shipments until later this week.
Iranian troops partly withdrew from a disputed oil area in Iraq over the weekend, reducing tensions between two major crude exporters that had helped to boost oil prices by 1 percent on Friday.
Heavy snow and freezing temperatures in the U.S. Northeast and Europe also pushed prices higher. U.S. government data last Wednesday showed large declines in U.S. crude and distillate inventories in the previous week, in part due to colder weather.
The price of oil has risen from a 2-1/2-month low below $70 a barrel a week ago. Prices also rose Monday in tandem with U.S. equities, on optimism that an economic recovery could boost fuel demand. .SPX
Oil price gains were capped by a firm dollar, which hovered near its highest level in more than three months against the euro on Monday.
Strength in the greenback makes dollar-priced commodities more expensive for holders of other currencies.
"We suspect that it will likely continue to strengthen into the year end and act as an overall drag on (oil) prices," MF Global analyst Edward Meir said.
There was little reason to expect a change in output policy from the OPEC meeting in Luanda that starts on Tuesday, with oil ministers saying targets would be retained.
Saudi Arabian Oil Minister Ali al-Naimi has already made clear he believed the current price is right. His view was echoed by Algerian Energy and Mines Minister Chakib Khelil and Iraqi Oil Minister Hussain al-Shahristani.
"The OPEC meeting has status quo written all over it," said Evans.
Japan's crude oil imports rose 0.4 percent in November from a year ago, the first year-on-year gain in 13 months as the country recovers from the global financial crisis.