Oil steadied on Monday after a 1 percent rise on Friday, as Iranian troops partly withdrew from a disputed oil area in Iraq, easing tensions between two major crude exporters, Reuters reported.
The more actively-traded February contract edged up, helped by frigid weather in the U.S. Northeast and Europe, but the gains were limited during a holiday week and ahead of Tuesday's OPEC gathering.
Crude for January delivery, which expires later in the day, fell 11 cents to $73.25 a barrel by 0618 GMT, after settling up 73 cents on Friday.
London Brent crude was up 20 cents at $73.95.
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.
"Although the incident leaves apprehension, it is not interfering with oil production, so it is not a factor to produce an explosive upward momentum," said Ken Hasegawa, a commodity derivatives sales manager at broker Newedge in Tokyo.
Heavy snow and freezing temperatures in the U.S. Northeast and Europe helped support prices.
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 amid colder winter.
But the upside has been capped by a firm dollar, which hovered near its highest point in more than three months against the euro on Monday.
There is little reason to expect a change in output policy from the OPEC meeting that starts on Tuesday, with oil ministers saying targets would be left untouched.
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 December 15 as crude prices slipped, the Commodity Futures Trading Commission said.