Oil Mixed, on Track to End Week Up on Iran, Greece

Brent crude oil ended lower on Friday as investors booked profits after gaining for four straight days and hitting overbought conditions as it topped $120 a barrel.

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But Brent crude posted its fourth consecutive weekly gain, with prices elevated due to fears of supply disruptions in Iran and rising confidence that Greece will finally secure a debt bailout deal by Monday.

U.S. crude rose for the third consecutive day, ending at the highest level in nine months, and chalking up its second straight week of gains.

A slew of recent upbeat economic data has helped U.S. crude advance, although a report on Thursday that U.S. consumer prices rose the most in four months in January due to a spike in gasoline prices raised concerns that higher energy costs could slow the economic recovery.

Brent crude futures

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[LCOCV1  Loading...      ()   ] settled at $119.58 a barrel, falling 53 cents, or 0.44 percent, after hitting a session high of $120.70, the highest since June 15.

For the week, Brent crude rose $2.27, or 1.94 percent, extending gains to the fourth week in a row.

U.S. light, sweet crude

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[CLCV1  Loading...      ()   ] settled at $103.24 a barrel, gaining 93 cents, or 0.91 percent, topping the $103.22 close from Jan. 4 and posting the highest finish since front-month crude ended at $103.88 on May 10.

For the week, U.S. crude ended up $4.57, or 4.6 percent. That marked its best performance since the week to Dec. 23, when front-month prices ended up $6.15, or 6.58 percent.

April Brent's premium against its U.S. counterpart contract narrowed sharply to $15.98 at the close, from $17.47 on Thursday.

Brent crude's Relative Strength Index (RSI) fell back to 70, from 73.6 on Thursday, according to Reuters data. A reading of 70 is the threshold for overbought conditions.

U.S. crude rose, latching on the movement in equities, some analysts said.

"While today's leading indicators and CPI data didn't present any major surprises, they also weren't sufficient to stall the recent upward acceleration equity trends," said Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois.

"Ongoing efforts to replace Iranian barrels during the coming months could keep the front of the Brent curve expanding," he said. And, delays in North Seas oil cargo will also be supportive to Brent, he added.

Brent's total volume was down more than 7 percent from its 30-day average while U.S. crude's volume was off 18 percent from its 30-day average, according to Reuters data.

"On the technical side, WTI (West Texas Intermediary crude) has held its ground, providing minor dips all week long (and) there has been good call spread buying all week long, providing for an upward bias," said Tony Rosado, options broker with GA Global Markets in New York.

Floor trading on the New York Mercantile Exchange will be closed on Monday in observance of the Presidents Day holiday.

The weekly U.S. inventory reports will be delayed a day due to the holiday. Data from the American Petroleum Institute will be released on Wednesday, at 4:30 p.m. and the report from the U.S. Energy Information Administration will be issued on Thursday at 11 a.m. EST.

Iran Tension, Greek Outlook

Iranian President Mahmoud Ahmadinejad, accused by the West of pursuing a nuclear weapons program, said in Pakistan that foreign nations were determined to dominate the region and that this should not be allowed.

Ahmadinejad's remarks follows a string of belligerent comments from Iranian officials raising threats that Iran would retaliate in the wake of sanctions the West has imposed on Tehran due to its disputed nuclear program.

Iran, however, has sent a letter to European Union foreign policy chief Catherine Ashton signalling willingness to resume nuclear talks with world powers that have been frozen since January last year. The United States and EU expressed cautious optimism, but emphasized any new negotiations must be sustained and focused on the nuclear issue.

Iran's top oil customers in Europe are already making substantial cuts in imports ahead of EU sanctions that take effect in July, reducing flows to the continent in March by more than a third, industry sources said.

This has increased demand for replacement barrels from Saudi Arabia, Iraq and Russia, leading to higher prices, although there is no shortage of actual supply.

Meanwhile, Greece edged closer to winning a second rescue package worth 130 billion euros ($170 billion) as officials in Athens said Germany was optimistic a deal could be struck despite misgivings over whether Greece would stick to its commitments.

Euro zone finance ministers are due to meet on Monday, and expectations that they will sign off a bailout deal for Greece increased after a proposal was dropped to withhold part of the agreement until after Greek elections expected in April.

Prices were also supported by more evidence of sustained recovery momentum in the U.S. economy. U.S. data on Thursday showed jobless claims falling to a near four-year low, solid growth in factory activity in the Mid-Atlantic area and a faster-than-expected rise in housing starts.