By Claire Rangel
NEW YORK (Dow Jones) -Crude oil futures are trading near unchanged Monday, paring earlier losses on firmer equity markets and a weaker dollar.

Light, sweet crude for January delivery recently traded 12 cents, or 0.2%, higher at $69.99 a barrel on the New York Mercantile Exchange. It had touched an intraday low of $68.59 a barrel. Brent crude on the ICE futures exchange traded 40 cents, or 0.5%, higher at $72.28 a barrel.

Equity markets opened higher in New York and this, accompanied by a weakening in the dollar, helped oil trim its earlier losses.

“The rally off the lows is in response to equities opening higher,” said Peter Donovan, vice president of Vantage Trading in New York. There was also some encouragement for oil prices from a rise in metals markets, Donovan said.

Risk appetite appeared to have returned after news that Abu Dhabi will make $10 billion available to help relieve Dubai’s immediate debt issues. The Dubai government will use the cash to pay part of the debt held by conglomerate Dubai World.

But the Dubai news did not shake up the oil market too much as its current focus is on the fundamentals, specifically the high level of crude stocks in the U.S., said Phil Flynn, analyst with PFGBest in Chicago. This is holding oil prices back in its attempts to move above $70 a barrel again.

Last week, the U.S. government reported stocks at Cushing, Okla., the delivery point for the WTI contract, were at 33.4 million barrels, fast approaching record levels.

With U.S. demand still lackluster with gasoline and diesel consumption lagging the global economic recovery, traders are growing more concerned that it will take some time for these stocks to be drawn down.

This is placing increasing pressure on the front month January crude contract, which oil market participants are selling heavily. This caused the discount between the first and second month contracts to widen to more than $2.50 Monday, the widest level since April.

Traders are discounting the January contract, as this represents the ample volume of crude supplies available.

“People are realizing that for the short-term we are overloaded with supply,” said Flynn. “We have more production coming from OPEC and there seems to be a glut of oil in the marketplace.”

With oil’s sharp descent in recent weeks to below $70 a barrel, the oil market is looking ahead to the Organization of Petroleum Exporting Countries meeting in Angola on Dec. 22, to see if it will make any changes to its production quotas.

Early indications from members of the organization are that they do not expect to raise output.

Front-month January reformulated gasoline blendstock, or RBOB, recently traded 28 points, or 0.2% lower, at $1.8444 a gallon. January heating oil recently traded 1.36 cents, or 0.7%, higher at $1.9221 a gallon.

-By Claire Rangel, Dow Jones Newswires; 212-416-2846; claire.rangel@dowjones.com.

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