* Oil to average nearly $80 in 2010, second highest on
record
* U.S. natural gas, crude stocks fall less than expected
* Weaker dollar, positive US economic data supports
* Technicals point to drop back to $89.02
* For a 24-hour technical outlook click:
* http://graphics.thomsonreuters.com/WT/20103112084230.jpg
By Randy Fabi
SINGAPORE, Dec 31 (Reuters) - Oil was set to close the
year up more than 12 percent and average nearly $80 a barrel
-- the second highest on record -- driven by a resurgence in
global demand, an unusually cold winter and falling inventories.
After rallying since May to a 26-month high of $91.88 on
Monday, U.S. crude edged lower on Friday, with the February
contract <CLc1> down 30 cents at $89.54 a barrel by 0345 GMT.
The smaller-than-expected drawdown in U.S. natural gas and
crude stocks pressured prices, offsetting upbeat economic data
from the world's top oil user. Oil prices were set to average
$79.60 this year, second only to 2008's record average of
$99.75.
ICE Brent crude <LCOc1> eased 19 cents to $92.90.
U.S. natural gas inventories fell last week by 136 billion
cubic feet (bcf) to 3.232 trillion cubic feet (tcf), the
Energy Information Administration (EIA) said, below market
expectations. []
"The 136 bcf net withdrawal was toward the lower end of
the range of expectations and should be a test of whether the
bears can reassert control of the market after the recent move
higher," said Timothy Evans, energy analyst at Citi Futures
Perspective.
U.S. natural gas futures <NGc1> traded 1.1 cents lower at
$4.327 per million British thermal units.
Crude stocks in the world's largest economy also fell
less-than-expected, easing by 1.26 million barrels to 339.43
million barrels in the week to Dec. 24, the EIA said.
Gasoline supplies fell by 2.32 million barrels, while
distillate stocks rose 243,000 barrels.
"The latest U.S. weekly data release show a continuation
of the recent strength in oil demand," said analysts at
Barclays Capital in a research note.
"December is set to be the strongest month of the year in
demand terms, with particularly strong indications of gasoline
demand."
OPEC SUPPLIES
Even with crude stocks slipping four straight weeks and
prices peaking to a 26-month high of $91.88 a barrel earlier
this week, OPEC output has risen only slightly in December as
Nigerian supply increased, a Reuters survey found.
Supply from the 11 OPEC members with output targets has
averaged 26.75 million barrels per day (bpd) this month, up
from 26.70 million bpd in November, the survey of oil
companies, OPEC officials and analysts showed. []
Core OPEC ministers have indicated they would not provide
more oil supplies to arrest oil's rally, saying $100 crude was
a fair price. []
Oil found support from a weaker dollar and positive U.S.
economic data.
The dollar languished against the Swiss franc, hitting an
all-time low, and fell to a seven-week trough against the yen.
The dollar index was down 0.14 percent at 79.408.
The greenback declined despite supportive jobless claims
and factory data that bolstered views the U.S. economy had
gained momentum at year-end and was set for a stronger
performance in 2011.
The positive data could cause the U.S. Federal Reserve to
curb its recent initiatives to spur economic recovery, which
could strengthen the dollar and limit price boosts for
dollar-denominated commodities.
(Editing by Ramthan Hussain)
