Oil rises above $79

Oil finished the year above $79 a barrel on Thursday, climbing a whopping 78 percent in 2009 and notching the biggest annual gain in a decade. The market roared back from depressed levels seen at the end of 2008 that came as the global economic crisis sapped demand.
US crude for February delivery settled up 8 cents at $79.36 a barrel, compared with a close of $44.60 on December 31, 2008. London Brent crude fell 10 cents on Thursday to settle at $77.93. This year's rise in US oil futures is the sharpest annual percentage gain since 1999, when output cuts by producers helped revive prices from lows near $10 a barrel.
Oil on Thursday was still almost half the all-time high of $147.27 hit in July 2008. After sliding to a five-year low under $33 at the end of 2008, oil prices staged a steady climb to a high of $82 in October this year. The annual average 2009 price was $62, broadly in line with analysts' predictions at the end of 2008 of $58.48.
Crude was supported on Thursday by data from the US Energy Information Administration (EIA) that showed declines in crude oil stockpiles last week, boosting expectations of demand recovery in the world's largest energy user. "Momentum seems to run out near $80 as market participants ponder the conundrum of whether or not a sustainable recovery is actually underway," Mike Fitzpatrick, vice president at MF Global in New York, said in a note.
Oil's rise of nearly 80 percent this year was part of a broad-based rally across commodities and equities as investment returned to markets drained by the global economic recession. "While it was nominally a very strong year for commodities, it was a relative weak year for passive investors," said Olivier Jakob, oil analyst at Petromatrix. Next year, analysts expected oil prices to consolidate this year's gains as demand continues its gradual recovery.
"TRANSITION" IN 2010 "We expect 2010 to be a year of transition between the demand concerns of 2009 and the supply concerns of 2011, with in addition geopolitical developments having a heightened importance," Barclays Capital said in a research note. US crude stockpiles fell by 1.5 million barrels in the week to December 25, just off an expected 2 million-barrel decline, while gasoline inventories showed a surprise decline, data from the EIA showed on Wednesday.
Crude inventories have slid by 19.5 million barrels in the past four weeks, eroding the excess supply to 50.1 million barrels, although stocks were still far above normal levels. There were signs on Thursday that crude oil supplies from some areas were on the rise as Opec output hit a 2009 high in December, led by increases in Nigeria and smaller rises elsewhere, a Reuters survey showed.