* U.S. oil stocks fall; excess down to lowest in 11 months
* Oil set for biggest annual gains since 1999
* Firm dollar fails to stop oil rise, geopolitics a
concern
(Updates prices, adds details)
SINGAPORE, Dec 31 (Reuters) - Oil rose towards $80 on
Thursday, extending its rally to a seventh day and poised for
the best annual gain in a decade, driven by a drop in U.S.
crude and fuel stocks as icy weather stoked demand.
The fall in crude stocks in the world's top energy user
over the past four weeks, pushing surplus inventories to its
lowest in 11 months, eclipsed the firm dollar, which held near
16-week peaks on a soft Japanese yen in Asia trade, before
sliding. [][]
U.S. crude for February delivery <CLc1> rose 49 cents, or
0.6 percent, to $79.77 a barrel by 0702 GMT, after touching a
five-week high of $79.85 in quiet pre-holiday trade. Prices
have risen 14 percent in just over two weeks.
London Brent crude <LCOc1> rose 67 cents to $78.70.
After sliding to a five-year low under $33 at the start of
2009, oil prices staged a steady climb to a high of $82, making
for an average of $62 for the year. Oil's near 80 percent rise
this year puts it on track for the sharpest gains since 1999.
This came on the back of OPEC supply cuts, a rebound in
emerging market demand and the revival of a popular dollar/oil
spread trade.
"The U.S. market does seem now to be undergoing a fairly
rapid burning off of excess inventory, helped along by demand
recovery and the continuation of historically low crude
mports," Barclays Capital said in a report.
"Crude inventories would be expected to climb from this
point into May, but they have ended 2009 with the lowest excess
over the five-year average seen at any point during the year."
U.S. crude stockpiles fell by 1.5 million barrels in the
week to Dec. 25, just off an expected 2 million-barrel decline,
data from the Energy Information Administration showed. []
Crude inventories have slid by 19.5 million barrels in the
past four weeks, eroding the excess supply to 50.1 million
barrels.
Most of that draw came in the isolated West Coast market,
with Gulf Coast and East Coast inventories showing builds, but
prices were also lifted by a 2 million-barrel drop in
distillates as cold weather hit the U.S. Northeast, the world's
largest heating oil market. []
Temperatures were expected to remain unseasonably cold for
the next two days, forecaster Meteorlogix said. []
2010 A BRIDGING YEAR
Barcap sees 2010 as a bridging year between 2009's
demand-side weakness and the return to supply-side tightness in
2011, with geopolitical concerns playing an enhanced role,
global refining margins to remain muted, while the overhang of
global distillates would slowly ease as recovery mode sets in.
Crude oil's robust end-year rally has also taken back the
OPEC basket value to within $2 of its high for the year, and in
the past week it has risen by $4.87 to $76.19 a barrel.
[]
Oil's ascent came despite the stronger dollar as the
inversely correlated trade that had gained favour as an
inflation hedge this year broke down in the face of oil-related
geopolitical fears and improving demand outlook.
The dollar was up 7 percent versus the yen for December, on
track for its best monthly performance since February. For
2009, the greenback was up 2.2 percent versus the Japanese
currency, though it still looked to end a volatile year with a
modest loss against a basket of major currencies.
The improvement in U.S. consumer confidence, underscoring
optimism in its economic recovery, also supported Asian
equities, which are set for a near 70 percent rise on the year.
[]
Commodity markets are on course for their strongest year
since 1973, lifted by oil's biggest annual gains in a decade
and a 140 percent surge in copper prices. []
For graphic showing how the 19 commodities that make up the
CRB index have performed, double-click:
http://graphics.thomsonreuters.com/129/CMD_RCRB1209.gif
Worries about potential supply impact from the political
upheaval in OPEC-member Iran have also supported crude prices
this week.
Hundreds of thousands of government supporters rallied
across Iran on Wednesday, swearing allegiance to the clerical
establishment and accusing opposition leaders of causing
unrest. Eight people were killed on Sunday and at least 20
pro-reform figures were arrested in anti government protests.
(Reporting by Ramthan Hussain; Editing by Himani Sarkar)
