Crude Settles Lower in 2011 Final Session

Oil futures settled lower Friday in the final trading session of the year as conflicting news from France and China gave divergent signals for global demand in 2012. 

Light, sweet crude for February delivery settled down 82 cents, or 0.8%, at $98.83 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures Europe exchange was down 63 cents, or 0.6%, at $107.38 a barrel. Volume was about half of normal levels.

Crude ended the year up 8.2%, rising from $91.38 a barrel a year ago. In between, it ranged from a high of more than $113 a barrel in May to a low of less than $76 a barrel in October, whipsawed by such factors as Middle East uprisings, Europe's debt crisis, mixed U.S. economic data and hostilities between Iran and the West. Still, oil ended the year close to $100 a barrel despite weak U.S. economic growth and persistently high unemployment, once again reflecting how U.S. demand has become eclipsed by foreign demand as growth shifts to emerging economies.

"America is getting used to the idea that we have a price to pay for high oil," said Carl Larry, president of research firm Oil Outlooks & Opinions. "Many people are dismissing the idea of $100 oil. But this is the reality. It's going to be higher next year. We're going to see improvement in the economy. We've proven over the past year that the economy can grow with high oil prices. We grow; we adapt."

On the day, crude futures were pressured by a new report showing slowing manufacturing activity in China, which the market took as a sign of slowing economic growth rate there. HSBC's monthly China Manufacturing Purchasing Managers Index was in contraction territory once again, and though the contraction was more moderate than last month, HSBC said the average reading for the fourth quarter was the worst since the first quarter of 2009.

As China's economic growth has called on a growing share of the world's oil supply, the market has focused close attention on its growth rate for indicators of crude demand. As the country's growth rate has slowed, analysts and traders have been looking for signs of whether it will experience a soft landing or a hard one.

"The Chinese factory data were pretty negative, as far as everyone looks at growth there and how the economy is going to affect demand for petroleum," said Tom Bentz, director of BNP Paribas Prime Brokerage. "Certainly another negative number from China is perhaps weighing on things a bit this morning."

But prices were supported by news that French refiner Petroplus was shuttering three refineries because of credit problems, on the back of weak demand, rising crude costs and foreign competition. The news was seen as bullish for petroleum products refined from U.S. crude, which can be exported to meet foreign demand.

Front-month January reformulated gasoline blendstock, or RBOB, settled up 0.62 cent, or 0.2%, at $2.6863 a gallon. January heating oil rose 1.75 cents, or 0.6%, at $2.9350 a gallon.