MW: Oil advances on report of Iranian incursion into Iraq
By Nick Godt & Polya Lesova, MarketWatch
A previous version of this report gave the incorrect price gain for February crude oil.
NEW YORK (MarketWatch) -- Crude-oil futures finished higher on Friday, but were well off highs, as a stronger dollar capped an early rally sparked by reports of an Iranian incursion into an Iraqi oil field.
Crude oil for February delivery finished with a gain of 34 cents, or 0.5%, at $74.42 a barrel on Globex. The less actively traded January contract rose 71 cents to $73.36 a barrel.
Iranian forces took over an oil well in a disputed region in the south of Iraq, the news agency Agence France Presse reported, citing U.S and Iraqi officials.
"There has been no violence related to this incident and we trust this will be resolved through peaceful diplomacy between the governments of Iraq and Iran," a U.S. military spokesman told AFP.
Oil futures had finished virtually flat on Thursday.
Also lifting oil, the dollar index (DXY 77.82, +0.13, +0.16%) , which measures the performance of the greenback against a basket of other major currencies, was down slightly at 77.73 in recent trading.
The dollar and oil prices have had a strong inverse relationship in recent months; when the dollar falls, oil prices tend to rise.
Despite Friday's decline, the greenback has recently strengthened overall, rallying to its highest level in more than three months on Thursday. The dollar found support from a rush to safety spurred by concerns about Greece's debt payments and a reassessment of when the Federal Reserve could begin to tighten U.S. monetary policy.
"Given the ferocity of the dollar rally and our view that the greenback should continue to strengthen even further heading into the year-end, we would be inclined to lean more towards the short side for the next few days," wrote Edward Meir, senior commodity analyst at MF Global, in a note to clients.
Investors are also awaiting the meeting of the Organization of the Petroleum Exporting Countries, which will take place in Angola on Tuesday. The oil cartel isn't expected to announce any changes to production levels.
"Although the cartel's decision is well-discounted by now, we might see the markets weaken once the actual announcement comes out, as it will only reinforce how behind the curve OPEC really is," Meir said.
Also on Globex Friday, January natural-gas futures gained 9 cents, or 1.6%, to $5.86 per million British thermal units.
Natural-gas prices rose more than 5% Thursday, after a report showed weekly U.S. stockpiles dropped sharply as cold temperatures across much of the nation boosted use of heating fuels.
On Friday, natural gas for January delivery gained 2 cents at $5.78 per million British thermal units. Gasoline for January rose 4 cents to $1.89 a gallon, and heating oil for the same month rose nearly 1 cent to $1.96 a gallon.
