Updated from 12:28 p.m ESTOil prices erased early losses and closed higher Friday on concerns that a nuclear standoff with Iran will cut world crude supplies. Light, sweet crude for April delivery closed at a fresh three-week high of $63.67 a barrel, up 31 cents on the Nymex. Front-month crude has risen in five of the last six sessions, bolstered by concerns that several overseas political dramas will be bad news for the currently bountiful U.S. inventory picture. "The bulls are asserting control as it is more apparent that oil traders view the current oversupply as a necessary cushion against the risk of disruptions and the prospect of increasing demand," said Phil Flynn, an energy analyst at Alaron Trading in Chicago. Unleaded gasoline added 5 cents to settle at $1.74 a gallon, while heating oil tacked on 1 cent to $1.81 a gallon. E.U. and Iranian diplomats met on Friday to discuss Tehran's nuclear program, but failed to come to an agreement. Iran requested the session before the International Atomic Energy Agency's board meets next week to weigh the country's actions. Although the IAEA reported Iran to the U.N. Security Council for possible punitive actions, the group asked that nothing be done until its meeting on Monday. Iran restarted small-scale uranium enrichment last month in defiance of Western threats, which included a possible trade embargo. Tehran contends that it needs nuclear power to generate electricity, but the West suspects the move is a ruse to build atomic weapons. Traders have been following the Iranian standoff because the country is OPEC's second-largest producer of crude with 4 million barrels per day. As pressure heats over the nuclear impasse with Iran, traders are worried Iran will retaliate and slash its petroleum exports. Should economic sanctions be imposed against the country, there would not be enough crude to make up for the deficit and oil prices would inevitably rise. Even before any actions are taken against Iran, that country could retaliate with Another area of worry for the energy markets was Nigeria, where daily oil production is down by 20%. Rebels have kidnapped oil workers and attacked pipelines, platforms, and processing facilities to gain a share of the country's oil wealth. Nigeria produces 2.6 million barrels of oil per day and is the fifth-largest oil supplier to the U.S. Militant attacks, though, are nothing new for the country, and are generally considered part of doing business there, analysts say. The attacks are more vicious than usual because rebels want to weaken the national government, which derives the bulk of its funding from oil revenues, ahead of elections next year. The Organization of the Petroleum Exporting Countries, which pumps 40% of the world's crude, meets March 8 and will decide whether to keep production at 25-year highs. The group of 11 oil-producing countries has maintained high output levels to help the U.S. get back on its feet from hurricane damage in the Gulf of Mexico and high winter heating demands. If OPEC trims production, prices could also rise next week. Crude's rebound prompted buying across the energy sector, with ExxonMobil ( XOM), BP ( BP), and Shell rising in trading Friday. Exxon tacked on 21 cents, or 0.4%, to $61.06 after Friedman Billings Ramsay upgraded its rating on the stock from market perform to outperform. BP added 19 cents, or 0.3%, to $67.10, and Shell rose 15 cents, or 0.2%, to $61.89. Natural gas added 3 cents to close at $6.79 per million British thermal units in defiance of the cold weather blanketing the Northeast, the country's largest user of heating fuels. When temperatures fall, consumers and companies use more natural gas for heating. Warmer-than-normal weather has cut natural gas prices and compelled investment bank J.P. Morgan Chase to cut their projections by 19% this year to an average of $7.32, according to a report released late Thursday. Still, an abnormally large amount of natural gas, which is also used to generate electricity, was helping drive down prices. There is 21% more natural gas in storage than last year, and 48% more than the five-year average. High natural gas supplies are canceling out any effects of cold weather. While temperatures are projected to be in the teens to low thirties across the Northeast, according to AccuWeather.com of State College, Pa., they won't be cold enough to draw down stockpiles that much. The Mid West and Northeast should enjoy above-normal temperatures through mid-March, according to the National Weather Service's 6-10-day outlook. "Whatever the weather for the remainder of the season brings, we will end the year with record storage levels," said James Williams, an energy economist at WTRG Economics in London, Ark. "It is not in question that they will be high but rather how high."