Oil prices rose in choppy trading as the U.S. January crude futures contract neared expiration and as cold weather demand offered support, even as a stronger dollar and concerns about euro zone debt helped limit oil's gains.
A shut pipeline in Nigeria amid more activity by militants and tensions on the Korean peninsula also helped support oil.
Amid year-end trading, investor caution was fuelled by the continuing concerns about euro zone debt woes. The dollar index strengthened and the euro fell after ratings agency Moody's said it may cut the ratings on some Spanish banks.
A stronger dollar can pressure dollar-denominated oil prices as it raises the value of dollars paid to producers and raises oil prices in markets using other currencies.
The expiring US January contract rose 28 cents to $88.30 a barrel, trading between $87.26 and $88.75.
Crude prices reached a 26-month high of $90.76 on 7 December.
US crude for February delivery rose 20 cents to $88.80, having traded from $87.73 to $89.20.
ICE Brent crude for February rose 42 cents to $92.09 a barrel, also in choppy trading.
