-- Low volume as many investors, money managers not trading -- Tension between Iran and the West provides support for crude oil prices -- Stronger dollar against the euro weighs on prices By Jenny Gross Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Crude oil futures were flat Thursday as worries that Iranian officials may close the Strait of Hormuz, seen as a threat to oil supply, counteracted negative sentiment following Italian and Hungarian bond auctions. At 1116 GMT, the February Brent contract on London's ICE futures exchange was flat at $107.55 a barrel. The February contract on the New York Mercantile Exchange was trading up 7 cents at $99.43 per barrel. Brent crude and Nymex prices traded in a narrow range in European trading as many traders stayed on the sidelines during the holiday season. Brent crude dipped into the red slightly after Hungary rejected all bids at a three-year bond auction Thursday and overall sold less bonds than planned. Similarly, the Italian Treasury sold a total of EUR7.02 billion of fixed-rate Treasury bonds and floating-rate bonds of various maturities, less than the targeted EUR8.5 billion. This seemed to outweigh the fact that Italy's funding costs eased from the euro-era high levels seen at the previous tender a month ago. Stocks also came off slightly after the auction. Market participants see bearish bond auctions in Europe as signals of flagging economic growth, which is negative for oil demand. Despite concerns over the health of the European economy, rhetoric from Iran signalling its willingness to close the strategic Strait of Hormuz, which sees about 15 million barrels of oil pass through it per day, if the West embargoes Iranian oil, lent support to crude oil prices. While talk about closing the strait is unlikely to fizzle out soon, "it remains to be seen if this can counterbalance what seems to be a strengthening greenback," London Capital Group said in a note. In Asia trading, the euro fell to an 11-month low against the dollar on concerns about the euro-zone debt crisis. This was bearish for oil prices as a stronger dollar makes purchasing oil more expensive for holders of currencies other than the greenback. The euro was at $1.2907 as of 1116 GMT, down from $1.2942 in late New York trade. Andrey Kryuchenkov, the vice president of commodities research at VTB Capital, said he expects the market to remain quiet for the rest of Thursday as many market participants remained on the sidelines. "Large players will remain absent until early 2012, while ongoing macro uncertainty and geopolitical risk jitters continue to deter willing buyers from entering the market just yet." Investors will look to crude supply data due later Thursday from the U.S. Department of Energy for cues on market direction. At 1116 GMT, the ICE's gasoil contract for January delivery was up $7.75, or 0.8%, at $926.00 per metric ton, while Nymex gasoline for January delivery was up 62 points, or 0.2%, at $2.6575 per gallon. -By Jenny Gross, Dow Jones Newswires; 4420-7842-9239; jenny.gross@dowjones.com

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