* Weakening dollar has also supported crude futures
Soaring North American output could dent prices later this year (Adds Canadian production, updates prices)
By Henning Gloystein
SINGAPORE, Jan 29 (Reuters) - Oil prices held firm on Monday on strong demand, a weaker dollar and ongoing supply cuts led by OPEC and Russia, although analysts said soaring North American output would dent the market outlook for later in the year.
U.S. West Texas Intermediate (WTI) crude futures were at $66.29 a barrel at 0659 GMT, up 15 cents, or 0.2 percent, from their last settlement.
Brent crude futures held above $70 per barrel, dipping 8 cents to $70.44 a barrel.
Oil has been propped up by supply restraint led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia. The cuts in supplies have coincided with strong demand on the back of healthy global economic growth.
The cuts, coupled with oil demand growth, have pushed up oil prices by 60 percent since mid-2017 as investors pour cash into crude futures in expectation of higher prices.
Oil has also been supported by a weakening dollar, which has lost over 3 percent in value against a basket of leading currencies since the start of this year and is down by almost 13 percent since January, 2017.
"Loose fiscal policy in the U.S., a recovery in growth in Europe and an acceleration in EM (emerging market) growth have all combined to push the dollar lower and oil prices higher," Bank of America Merrill Lynch said in a note.
U.S. bank JP Morgan said it had increased its 2018 average price forecast by $10 per barrel to $70 per barrel for Brent and by $10.70 per barrel for WTI to $65.63.
"We expect Brent to touch close to $78 per barrel towards end of Q1 2018 or early Q2 2018," it added.
Despite the bullish market, analysts said prices could start falling later this year due to rising output in North America.
U.S. crude production <C-OUT-T-EIA> has grown by over 17 percent since mid-2016 to 9.88 million barrels per day (bpd) in mid-January.
Output is expected to break through 10 million bpd soon. U.S. energy companies added 12 oil rigs drilling for new production last week, taking the total to 759, General Electric Baker Hughes energy services firm said on Friday.
U.S. production is already on par with top exporter and OPEC kingpin Saudi Arabia. Only Russia produces more, averaging 10.98 million bpd in 2017.
There are also signs that Canadian shale oil production, already at 335,000 bpd, could start to rise as investment in the sector picks up. Canada's overall crude production currently stands at 4.2 million bpd.
JP Morgan said it expected prices to fall towards the end of the year as markets become "flush with oil from shale and other unconventional oils."
(Reporting by Henning Gloystein; Editing by Richard Pullin and Joseph Radford)