* Frigid weather in U.S. Northeast, Europe supports prices
* OPEC meeting, holidays keep volumes low
* Dollar strength could weigh on prices
(Updates prices, adds quote)
By David Sheppard
LONDON, Dec 21 (Reuters) - Oil held firm above $73 a barrel
on Monday after a 1 percent rise in the previous session as
Iranian troops partly withdrew from a disputed oil area in Iraq,
reducing tensions between two major crude exporters.
The more actively traded February contract rose towards $75
a barrel, helped by frigid weather in the U.S. Northeast and
Europe, but gains were limited during a holiday-shortened week
and ahead of Tuesday's gathering of the Organization of the
Petroleum Exporting Countries (OPEC).
Crude for January delivery <CLc1>, which expires later in
the day, rose 43 cents to $73.79 a barrel by 1417 GMT, after
settling up 73 cents on Friday. The February contract was at
$74.95.
London Brent crude <LCOc1> was up 54 cents at $74.29.
Iraqi government spokesman Ali al-Dabbagh said on Sunday a
group of Iranian troops, who had taken over an oil well in a
remote region along the Iran-Iraq border last week, were no
longer in control of the well, which Iraq considers part of its
Fakka oil field. []
"Weather and geopolitics are supporting oil even in the face
of overwhelming supply and a glut of spare production capacity,"
PFGBest analyst Phil Flynn said.
WEATHER
Heavy snow and freezing temperatures in the U.S. Northeast
and Europe helped push prices higher.
Oil has risen from a 2-1/2-month low of below $70 a barrel a
week ago, after government data showed large declines in U.S.
crude and distillate inventories due in part to colder weather.
But gains have been capped by a firm dollar, which hovered
near its highest 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 prices," MF Global
analyst Edward Meir said.
There is little reason to expect a change in output policy
from the OPEC meeting that starts in Luanda on Tuesday, with oil
ministers saying targets would be retained. []
Saudi Arabian Oil Minister Ali al-Naimi has already made
clear he believes the current price is right. His view was
echoed by Algerian Energy and Mines Minister Chakib Khelil and
Iraqi Oil Minister Hussain al-Shahristani.
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. But gains
were limited as refiners reduced runs to offset high oil product
stocks.
Money managers continued to cut their net long crude oil
futures position on the New York Mercantile Exchange in the week
through Dec. 15 as crude prices slipped, the Commodity Futures
Trading Commission said.
(Additional reporting by Osamu Tsukimori in Tokyo; Editing by
Anthony Barker)
