Oil steadies over $99, eye on OPEC meeting

SINGAPORE (Reuters) - Oil prices steadied over $99 a barrel on Tuesday as a blast of cold weather swept parts of Europe and the United States, driving demand for heating fuels, while caution prevailed ahead of a March 5 OPEC meeting.

U.S. crude rose 3 cents to $99.26 a barrel by 0151 GMT. London Brent crude rose 26 cents to $98.05.

The cold weather sparked a rally in the major world heating fuel markets, boosting crude oil benchmarks.

London gasoil futures struck a record high on Monday while U.S. natural gas briefly touched a two-year high and heating oil HOc1 gained close to 1 percent.

"The firm oil price reflected the effects of forecasts of cold weather in the US Northeast, caution ahead of the March 5 OPEC meeting and geo-political tensions in the Middle East," David Moore, a commodities strategist at the Commonwealth Bank of Australia, said in a research note.

Oil prices hit a record peak over $101 a barrel last week, buoyed by speculative funds who continue to have a healthy appetite for commodities.

Also supportive for prices are a Turkish military incursion into oil-producing northern Iraq, worsening strains between Iran and the West over Tehran's nuclear ambitions, and Venezuela's dispute with Exxon Mobil Corp (XOM.N: Quote, Profile, Research, Stock Buzz) over compensation for a nationalized oil project.

The market was eyeing policy direction from OPEC members ahead of the group's next meeting on March 5.

On Monday a senior Iranian oil official said there was enough crude in the market and saw no reason for OPEC to raise output, an Oil Ministry Web site said.