Oil traded around $66 a barrel on Monday, steadying after an earlier decline which extended last week’s 8.4 percent slide, as the U.S. dollar lost ground and stock markets moved higher.

The dollar gave up most of its earlier gain against a basket of currencies, boosting the appeal of oil and commodities to investors. European stocks firmed and U.S. equity futures pointed to a higher opening.

“It’s making some progress back up, largely due to the dollar,” said Rob Montefusco of Sucden Financial. “At the same time, we haven’t seen demand pick up and we need that to draw strength back into this sector at the moment.”

U.S crude was up 8 cents to $66.10 a barrel by 1308 GMT, after earlier falling as far as $65.41. London Brentwas down 11 cents to $65.00.

Iran test-fired a type of missile on Monday which defence analysts have said could hit Israel and U.S. bases in the

Oil fell to below $65 a barrel today, Monday and touched a five-week low earlier in the session, pressured by doubts over the prospects for a recovery in the global economy and energy demand.

The U.S. jobless rate reached a 26-year high and Euro zone unemployment is at the highest in a decade, reports showed last week. Oil fell even after militants attacked oil installations in major African exporter Nigeria.

“There’s a general retreat caused by lack of risk appetite,” said Mike Wittner, oil analyst at Societe Generale. “For a couple of months, we perhaps got a bit too optimistic and several markets got ahead of themselves.”

U.S. crude fell $2.24 from Thursday’s close to $64.49 a barrel by 1412 GMT. It traded as low as $63.40, the lowest intraday price since May 28. Brent crude fell $1.30 from Friday’s close to $64.31.

NYMEX floor trading was closed on Friday because of the U.S. Independence Day

Oil rose to $70 a barrel on Monday after Nigeria’s main militant group said it attacked a Royal Dutch Shell oil platform, outweighing a fairly bearish report from the International Energy Agency (IEA).

The Movement for the Emancipation of the Niger Delta (MEND) said its fighters struck the Shell Forcados platform in the Delta state at about 0230 GMT.

There was no immediate independent confirmation but Shell said it shut in some oil production at its western operations in the Delta while it investigated reports of attacks.

U.S. crude for August delivery rose to a high of $70.06 per barrel, up 90 cents, before slipping back slightly to $69.75 by 1230 GMT.

London Brent crude was up 60 cents at $69.52.

“The Nigerian supply disruptions brought in some buying,” said Christopher Bellew, broker at Bache Commodities in London.

On Friday, four militant Nigerian factions said they would accept in principle an amnesty offer from President Umaru Yar’Adua, raising hopes

February U.S. crude futures contract expires on Tuesday… Cold weather hits U.S. Northeast… OPEC says enforcing production cuts… Russia and Ukraine reach deal in gas dispute…

Oil jumped more than 3 percent on Tuesday as winter weather blasted the United States amid signs OPEC has tightened supplies.

Further support came as the U.S. February crude contract headed for expiry at the end of the trading session.

U.S. February crude rose $1.25 to $37.76 a barrel by 12:52 EST (1752 GMT), while March crude fell 76 cents to $41.81 a barrel. London Brent gained 34 cents to trade at $44.84 a barrel.

“There’s a short-squeeze play going on ahead of February crude’s expiration, as there are still some traders heavy with shorts on this last trading day for the contract,” said Phil Flynn, analyst, Alaron Trading, Chicago.

“The market is also filling the gap

Russian gas deal, Gaza ceasefire ease supply concerns… World oil demand expected to fall in 2009… U.S. holiday leads to low trading volumes…

Oil fell more than $2 towards $34 a barrel on Monday after Russia and Ukraine signed a 10-year gas deal clearing the way for the resumption of supplies to a freezing Europe.

Implementation of a ceasefire between Israel and Hamas in Gaza also eased supply concerns as the market remained under pressure from expectations that the weakening global economy would erode oil demand.

“Right now the economy is dominating,” said Harry Tchilinguirian, analyst at BNP Paribas. “The market is very volatile and the signs are that demand is weakening.”

U.S. crude oil futures for February delivery dipped to a low of $33.89, down $2.62, before recovering to trade at $34.53 by 1800 GMT.

Traders said the February U.S. crude oil futures