Oil inched up on Monday, as a weaker US dollar, cold weather and geopolitical disputes provided support after three straight losing sessions. Unusually cold weather will settle across key heating fuel consuming regions in the United States this week, in the wake of heavy snow over the weekend, forecasters said.
The United States and France have threatened carefully targeted new sanctions against Iran, which gave instructions on Sunday for the production of higher-grade nuclear reactor fuel. US crude for March rose 22 cents to $71.41 a barrel by 1:48 am (1848 GMT) The contract fell as low as $69.50 on Friday, the lowest since December 15. In London, Brent crude rose 6 cents to $69.65.
"The market is following what is going on in Iran and Nigeria and the cold weather is helping lend support along with the weaker dollar," said Dan Flynn, analyst at PFGBest Research in Chicago. A Nigerian militant group said on Sunday it had attacked a Shell oil pipeline in the Niger Delta but the company said it had no reports of any such sabotage. Investors have looked to wider economic data over the past year for signs of a recovery in the global economy and a potential rebound in flagging energy demand.
The euro remained near 8-1/2 month lows versus the dollar on Monday as traders worried about debt troubles in Greece, Portugal and Spain, helping support crude prices. Over the past year, oil prices have frequently weakened as the dollar firmed, at times signalling a flight to safer havens by investors. Conversely, crude prices have often risen as the dollar has weakened.
Wall Street stocks slipped on Monday, as the eurozone's debt problems weighed on sentiment. Major commodity markets are testing 200-day moving averages after sharp sell-offs in the past three weeks, but that important technical support level appears to have held for US crude.
"For now, we would venture to say that a measure of stability could be with us over the next day or two," said Edward Meir, analyst at MF Global, in a report. Oil fell 2.7 percent on Friday as a tepid employment report in the United States, the world's top energy consumer, heightened worries of a sluggish recovery in fuel demand. It has lost nearly 10 percent this year.
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