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Oil was supported by data from the U.S. 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.

 

U.S. crude for February delivery rose 6 cents to $79.34 a barrel by 1254 GMT (7:54 a.m. EST), its seventh straight session of gains. Prices have risen 14 percent in just over two weeks.

London Brent crude fell 1 cent to $78.02.

U.S. oil futures were on track for the sharpest annual percentage gain since 1999 but remained 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, making the annual average $62.

Oil's near 80 percent rise 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.

U.S. 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.

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.

Source: Reuters

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