Oil prices settled above US$S61 a barrel on Friday to finish the year roughly where they began, marking another tough year for energy consumers and another stellar one for the petroleum industry.
It was the fifth straight year in which oil prices were higher than the year before, on average.
Many analysts are looking for crude-oil futures next year to average more than US$60 a barrel because of robust demand growth in Asia and the Middle East, efforts by OPEC to trim supply and market-rattling instability in energy-rich countries such as Nigeria and Iraq.
But slower economic growth in the US and a production spurt from non-OPEC countries should keep prices below this year's average of US$66 a barrel, analysts said. And with expectations of fewer refining bottlenecks, gasoline and other fuels should be less expensive -- though not cheap when compared with costs from just a few years ago.
"There will be an easing of conditions, but not a dramatic reversal," said Antoine Halff, an analyst at New York-based Fimat, who cautioned that supply disruptions have the potential to cause short-term spikes.
"Nigeria looks increasingly unstable," Halff said, adding that internal politics in Iraq could hamper that country's all-important oil sector, too.
The other country to keep an eye on is Iran, whose nuclear ambitions recently prompted UN sanctions.
On Friday, light sweet crude for delivery next month rose US$0.52 to settle at US$61.05 a barrel on the New York Mercantile Exchange, up a penny from where it ended last year.
Nymex oil futures peaked at US$78.40 on July 14, but averaged US$66.25 for the year, compared with US$56.70 last year and US$41.47 in 2004.
February Brent at London's ICE Futures exchange rose US$0.19 to settle at to US$60.86 a barrel.
The average retail price of gasoline in the US ended the year at approximately US$2.34 a gallon (US$0.63 a liter), or US$0.14 a gallon higher than a year ago.
Analysts say that the US$3 level could be within reach in some parts of the country next summer, but that prices next year should mainly be lower than this year, when they averaged US$2.38 a gallon nationwide.
Oil Price Information Service analyst Tom Kloza said he expects the cost at the pump for the eastern two-thirds of the US to rise from US$2.50 to US$2.80 a gallon ahead of summer, the peak demand period.
Kloza said fears about supply disruptions, should drive the retail price of gasoline to US$3 a gallon and more in California, Nevada, Oregon and Washington.
The price of natural gas plummeted by almost 41 percent from start to finish this year thanks in large part to mild weather and bulging US inventories, but remained high by historical standards. For the year, natural gas futures averaged US$6.98 per 1,000 cubic feet, or 23 percent below last year's average of US$9.01.
Natural gas futures settled on Friday at US$6.299 per 1,000 cubic feet, an increase of US$0.051.
In other Nymex trading, heating oil futures declined by US$0.252 to settle at US$1.5979 a gallon, while unleaded gasoline futures fell US$0.402 to settle at US$1.5419.
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