Oil prices rose to near $74 a barrel Friday amid expectations OPEC plans to leave production levels unchanged at its meeting next week. A slightly weaker dollar and cold weather on the U.S. East coast also helped support prices.
By early afternoon in Europe, benchmark crude for January delivery was up $1.22 to $73.87 in electronic trading on the New York Mercantile Exchange. On Wednesday, the contract fell 1 cent to settle at $72.65.
Investors will be watching closely the output policy decided at the Organization of Petroleum Exporting Countries' meeting Tuesday in Luanda, Angola. Leaders of the 12-member cartel have said they would like the price of oil above $70 a barrel and so far signaled they plan to keep production unchanged.
"Crude oil prices are likely to remain within the range of $70-$80 by the end of the year, with investors waiting for confirmation over OPEC compliance decisions, oil inventories, and global economic figures," said a report from Sucden Research in London.
Traders are also looking for evidence demand for crude and its products is improving. Energy Department data released earlier this week showed U.S. demand for distillates such as heating oil and diesel were at its highest since March due to colder weather and a growing economy, Barclays Capital said.
"Distillate demand showed the first signs of inspiration," Barclays Capital said in a report. "Cold weather should complement the advent of greater trucking activity, thereby providing a boost to demand."
While the dollar was still near three month highs, it weakened slightly against the euro and British pound Friday, sustaining prices by making crude cheaper and more attractive to investors holding other currencies.
The euro rose to $1.4354 from $1.4349 late Thursday in New York, while the British pound advanced to $1.6187 from $1.6156.
"Continued strength in the Dollar Index kept most of the commodity complex under pressure (Thursday) and the evolution of the dollar will remain a strong market input as we start to approach the end of the year," said Olivier Jakob of Petromatrix in Switzerland.
In other Nymex trading in January contracts, heating oil rose 2.90 cents to $1.9864 while gasoline rose 3.62 cent to $1.8882. Natural gas jumped up 15 cents to $5.918 per 1,000 cubic feet.
"The cold weather and strong stock draws are maintaining a strong support in U.S. natural gas," Jakob said.
In London, Brent crude for February delivery rose 91 cents to $74.28 on the ICE Futures exchange.
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