Brent oil futures end the year at $107, expect higher prices in 2012

Brent oil futures end the year at $107 a barrel, confirming three straight years of gains for the European oil contract and high oil prices are expected to continue weighing on the European economy as it struggles to grow in 2012.

Brent Oil Futures – Closing Price

ICE Brent crude oil futures for February 2012 delivery ended the week’s trading session at $107.59 a barrel on the ICE Futures Exchange, or 0.4 percent lower on the day.

Brent Prices up 14 Percent This Year

Brent crude oil futures ended 2011 up nearly 14 percent and at a record high annual average, as political tensions in OPEC member states in the Middle East help negate a global economic slowdown that has dampened oil demand growth.

Brent oil prices fell lower on the final trading day of the year as traders balanced a surprise rise in US crude stockpiles with positive US economic data and Iran’s threats to a vital oil trade route.

Brent Oil Price Average for 2011

Despite Friday’s fall, Brent is poised to close the year averaging around $111 a barrel, 13 percent higher than the previous annual record high average of $98.52 reached in 2008.

European Economic Problems

Brent crude prices traded in a narrow range in European trading on Friday as many traders stayed on the sidelines during the holiday season. Brent oil prices dipped into the red slightly after Hungary rejected all bids at a three year bond auction on Thursday and overall sold less bonds than planned.

Despite concerns over the health of the European economy, rhetoric from Iran signalling its willingness to close the strategic Strait of Hormuz, which sees about 15 million barrels of oil pass through it per day, if the West embargoes Iranian oil, lent support to crude oil prices.

“It remains to be seen if this can counterbalance what seems to be a strengthening US dollar.” London Capital Group said in a note.

Welcoming in 2012

Many economists believe that by the end of 2012 most of the west could well have slipped into a second devastating recession.

In the Middle East, the excitement of the Arab Spring has long since curdled into sectarian tension and fears of Islamic fundamentalism. And with so many of the world’s oil supplies concentrated in the Persian Gulf, many will be keeping an anxious eye on events in the Arab world next year.

Meanwhile, as the eurozone slides towards disaster, the prospects for Europe have rarely been bleaker. Already the European elite have installed compliant technocratic governments in Greece and Italy, and with the markets now putting pressure on France, few observers can be optimistic that Europe can avoid a total meltdown.

As commentators often remark, the world picture has not been grimmer since the dark days of the mid Seventies, when the OPEC oil shock cast a heavy shadow over the Western world. It’s going to be an interesting 2012…

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Brent oil futures end the year at $107, expect higher prices in 2012