Oil prices were steady on Monday, finding support from a sharp decline in the US dollar and expectations oil cartel Opec would leave its output unchanged. US light crude for April delivery rose 16 cents to $102.00 a barrel. London Brent crude rose 21 cents to $100.31.
"The weak dollar is a big factor in supporting oil prices at the moment. Investors are also likely to hold on to oil until Opec's meeting on Wednesday because they might just cut output," said Rowan Menzies, head of research at Commodity Warrants Australia.
Crude oil is priced in US dollars so when the US currency declines oil prices rise to reflect that. "Recession in the US is still a worry but that is not an immediate concern at the moment," said Menzies The US dollar fell to a record low against a basket of major currencies as expectations for more aggressive Federal Reserve interest rate cuts encouraged funds to pour money into commodities to hedge against inflation.
A combination of a weak US dollar, supply disruptions from Ecuador and a fire at a European natural gas terminal had helped oil rally to a record $103.05 on Friday, beating the inflation-adjusted high of $102.53 reached in 1980 after the Iranian revolution.
Rumbles from the Organisation of the Petroleum Exporting Countries (Opec) over the weekend also strengthened expectations the cartel will keep supply levels unchanged, rebuffing calls from the US to hike output and tame prices.
Opec members Venezuela and Libya said that Opec would likely keep its oil output steady when it meets on March 5 in Vienna, due to uncertainty about the US economy.
A Reuters poll showed all 15 respondents expected the group to leave its formal output policy unchanged. Tensions in the Middle East, South America and Nigeria were also lending support to prices, analysts said. "The issues are not new but they have the potential to blow up and cause supply disruptions," Menzies said.
UN investigators want Iran to explain an organisational chart linking projects to process uranium, test explosives and modify a missile cone for a nuclear payload, diplomats briefed on the matter say.
In Nigeria, attackers armed with AK47 rifles and dynamite blew up a police houseboat on Bonny Island, an oil and gas export hub in southern Niger Delta, a police spokeswoman said on Saturday. Venezuelan President Hugo Chavez asked for tanks to be moved to the Colombian border and mobilised fighter jets on Sunday, warning Bogota could spark a war after its troops struck inside another of its neighbours, Ecuador.
Crude speculators on the New York Mercantile Exchange increased net long positions last week to the highest in seven weeks, according to data from the Commodity Futures Trading Commission released on Friday. Net crude long positions rose to 91,625 in the week to February 26 from 60,873 in the previous week.