Oil futures falter as Iran, Nigeria fuel supply fears

World oil futures closed marginally lower on Friday in line with falls for natural gas, but traders said anxiety remained about the nuclear crisis surrounding Iran.

New York's main contract, light sweet crude for delivery in February, lost US$0.02 to close at US$63.92 a barrel ahead of a long weekend. US markets are closed tomorrow for Martin Luther King day.

In London, the price of Brent North Sea crude for February delivery ceded US$0.36 to end at US$62.26 a barrel.

Both contracts had hit four-month highs on Thursday on concerns that Iran, the world's fourth-biggest oil exporter, would cut its crude supplies if referred to the UN Security Council over its nuclear program.

Supply fears were exacerbated by tensions in Nigeria, where Anglo-Dutch energy giant Shell said it was losing some 226,000 barrels per day (BPD) after a major pipeline was sabotaged and four foreign oil workers were abducted.

Oil markets are braced to see what, if any, sanctions are imposed on Iran for pursuing what the West suspects is a covert program to build a nuclear bomb.

"Yet with expectations of a shortened session today as well as the realization that there has been no loss of oil from Iran yet, key resistance areas held," Alaron Trading's Phil Flynn said.

ABN Amro trader Paul Goodhew said Friday's slender falls for crude also came "on the back of the losses we've seen in natural gas prices in the US."

In New York, gas prices fell US$0.1520 to US$8.791 per million British thermal units -- their lowest point in almost six months.

Demand for natural gas in the US has eased thanks to milder temperatures in the US northeast, Goodhew said.

But oil prices can be expected to rise again next week as the Iran crisis plays out, analysts said.

"The volume of this conflict will ebb and flow but it's not going away," Fimat analyst Mike Fitzpatrick said.

"This is why the market has been able to maintain relative strength in the face of mild weather and rising product stats," he said.

The Islamic republic threatened on Friday to end cooperation with the UN atomic watchdog over its nuclear programme if the issue is referred to the UN Security Council, which has the power to impose economic and military sanctions.

"Concern that the Iranian nuclear issue will soon involve the UN Security Council is potentially going to keep the market supported until it is resolved," Sucden analysts said.