LONDON, (Reuters) – Oil rose above $73 a barrel on Friday due to the prospect of increased winter demand as a cold snap gripped the U.S. Northeast and on a weaker dollar.
The dollar fell from a more than three-month high on Friday, underpinning oil’s gains. A weaker dollar makes commodities such as oil cheaper for those holding other currencies.
U.S. crude for January delivery rose 83 cents to $73.48 a barrel by 1122 GMT. London Brent crude was up 57 cents at $73.94.
“Firstly, the weaker dollar is supportive today,” said Eugen Weinberg, oil analyst at Commerzbank in Frankfurt. “The U.S. weather is having an impact as well, especially on natural gas where yesterday stocks fell more-than-expected and it is also helping oil prices.”
U.S. natural gas inventories fell for just the second time this winter season, down 207 billion cubic feet, according to the U.S. Energy Information Administration.
U.S. President Barack Obama joined other world leaders in Copenhagen in a last push for a new global climate deal on Friday, but with no agreement on the core issue of greenhouse gas emissions they faced an enormous task.
“If there is no strong binding agreement the market might take it as a signal that fossil fuel demand will remain as it is, which helps prices,” Weinberg said.
The Organization of the Petroleum Exporting Countries (OPEC) will not change output targets when it meets in Angola on Dec. 22, the group’s president said on Friday.
“Oil prices are trading at $70 to $75 per barrel which is the level our group has defended. I believe we will maintain the decisions that were taken in the past about output quotas and keep targets unchanged,” Jose Botelho de Vasconcelos told Angolan Radio Ecclesia.
That view was echoed by the group’s most influential oil minister, Saudi Arabia’s Ali al-Naimi, in comments published on Friday.
“The (meeting) will not lead to any change in production,” Saudi-owned al-Hayat quoted Naimi as saying. “And the oil price of $75 to $80 is something we all want,” Naimi told the newspaper in Copenhagen, where he was attending the U.N. climate summit.
U.S crude oil is expected to rise to an average of $76.40 a barrel in 2010 and $82.70 in 2011, a Reuters poll showed on Friday, as global economic recovery solidifies and the demand for fuel begins to soak up available supply.