* Brent set to see record-high annual average near $111
* Iran closure of strait seen as low probability
* U.S. oil, distillates stocks climb unexpectedly
(Recasts, adds Petroplus)
By Emma Farge
LONDON, Dec 30 Brent oil fell below $107 a
barrel on Friday, pressured by doubts that Iran will disrupt
supply and by an expected drop in European demand for crude due
to refinery outages, although the benchmark was still on track
to post a 13 percent gain for 2011.
Brent is poised to close the year at a record-high average
of around $111 a barrel, surpassing the previous annual peak of
just below $100 reached in 2008. With the exception of 2008, oil
prices have closed higher every year for the last decade.
The benchmark fell by $1.21 to $106.80 a barrel by
1316 GMT in the final trading day of 2011. U.S. crude was
down 68 cents at $98.97 a barrel by the same time.
Iran will fire long-range missiles during a naval drill in
the Gulf on Saturday, a semi-official news agency reported, a
show of force as Iran has threatened to close shipping lanes if
the West imposes sanctions on its oil exports.
"As for relations with Iran, further saber rattling seems
like a good bet ... beyond that, however, we remain of the
opinion than an actual supply disruption remains a low
probability," said Citigroup's Timothy Evans in a research note.
Petroplus, Europe's largest independent oil
refiner, will have to shut at least two of its five European
refineries in France and Belgium early next week unless it can
find new crude supplies, cutting demand for crude by nearly
200,000 barrels per day.
The Swiss refiner has struggled to source crude supplies
after lenders on Tuesday froze a $1 billion credit facility used
to buy oil.
Signs of comfortable winter oil stocks in the world's top
oil consumer also weighed on prices, analysts said.
U.S. crude oil inventories and distillate stocks both
climbed unexpectedly last week, according to weekly inventory
data from the U.S. Energy Information Administration released on
Analysts polled by Reuters expect slightly lower oil prices
of $105 a barrel in 2012 as forecasters such as the West's oil
watchdog, the International Energy Administration, expect global
demand to decelerate in 2012 due partly to the impact of the
euro zone debt crisis.
Chinese factory activity shrunk in December as demand
slackened, indicating a possible slowdown in growth in the
economies responsible for the lion's share of global oil
Another factor to watch will be the pace of economic
recovery in the United States.
New U.S. claims for jobless benefits rose last week, but the
underlying trend pointed to an improving labour market, while
regional factory data showed the world's largest economy gaining
momentum as the year ended.
"When traders get back to the market, they will be focused
on the recovery in the United States. As the number one
consumer, that may override the demand destruction we are seeing
in India, China and Japan," Barratt said.
(Reporting by Emma Farge and Randy Fabi in Singapore, editing
by Jane Baird)