* Oil to average nearly $80 in 2010, second highest on record
* Commodities outperform stocks in 2010
* Positive US data, Chinese comments support
(Adds comments, updates prices)
By Randy Fabi and Dmitry Zhdannikov
SINGAPORE/LONDON, Dec 31 (Reuters) - Oil was set to close
the year up more than 12 percent, despite a slight decline on
Friday, due to a resurgence in global demand, an unusually cold
winter and falling inventories.
Crude was also on track to average $79.60 a barrel for the
year, second only to 2008's record average of $99.75.
Strong demand for raw materials, especially in China, is
expected to push oil even higher next year, analysts said,
although cautioning the global recovery was still fragile.
After rallying to a 26-month high of $91.88 on Monday, U.S.
crude edged lower on the day, with the February contract <CLc1>
down 30 cents at $89.54 a barrel by 1158 GMT. ICE Brent crude
<LCOc1> fell 40 cents to $92.69.
U.S. crude stocks fell for the fourth straight week last
week, but the drawdown was less than expected and put downward
pressure on prices. []
But the fall in gasoline stocks was much bigger than
expected on year-end holiday travel demand, possibly signalling
rising consumption as the world's largest economy recovers from
recession.
"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," they added.
Including all products, the total US implied demand has
risen to the highest level of the year and above the levels of
2008, said Olivier Jakob from Petromatrix.
It was, however, soaring demand in Asia that analysts said
contributed most to healthy gains in oil and commodities in
2010. Prices in metals and soft commodities also beat records or
climbed near multi-year highs.
Chinese President Hu Jintao said on Friday the global
recovery would remain difficult but China would work to ensure
that its economic growth is stable and fast next year.
The Reuters-Jefferies CRB index <.CRB> of 19 commodities is
up 16 percent on the year, a more attractive return than on
stocks. <.SPX>
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For a graphic on return on assets:
http://r.reuters.com/veq33r
For a graphic on 2010 commodities performance:
http://r.reuters.com/ret24r
For a 24-hour technical outlook click:
http://graphics.thomsonreuters.com/WT/20103112084230.jpg
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However, some analysts have cautioned against excess
optimism about a continuation of the rally in 2011.
"Some positive economic news from the U.S. (such as the
recent decline in initial jobless claims) at year ending should
not outshine how fragile the global economic recovery is," said
analysts at JBC Energy.
OPEC SUPPLIES
Even with crude stocks slipping for four straight weeks and
prices peaking at a 26-month high of $91.88 a barrel earlier
this week, OPEC output has risen only slightly in December as
Nigerian supply has increased, a Reuters survey found. []
Core OPEC ministers have indicated they would not provide
more oil supplies to arrest the oil rally, saying $100 crude was
a fair price. []
"With non-OPEC production growth expected to slow down to
some 420,000 barrels per day next year, OPEC should face the
welcomed opportunity to bring on stream substantial additional
volumes," JBC Energy said.
"This is particularly true for the second half of 2011, when
we project the demand for OPEC crude to average clearly more
than 30 million barrels per day," it added.
(Editing by Jane Baird)
