(Corrects paragraph 9 to say Brent was back above the 200-day,
not 100-day, moving average)
* Brent crude oil heads for record annual average over
* Brent prices to post 4th straight full-year gain
* U.S. crude price to end 2012 down from 2011 finish
* U.S. Congress continues budget/fiscal negotiations
* Coming up: API oil data 4:30 p.m. EST Thursday
NEW YORK, Dec 31 Brent crude futures closed in
on a record full-year average daily price for 2012, even with
oil prices mixed in choppy trading on Monday as uncertainty
about a U.S. budget deal to avert mandated spending cuts and tax
hikes continued to buffet markets.
Brent crude futures were on pace to post a fourth
consecutive full-year gain, though the rise of nearly 3 percent
in 2012 will lag considerably the 13.3 percent rise in 2011.
U.S. crude edged higher on Monday in morning trading in New
York, but was on tap to end the year more than 8 percent lower
from its 2011 finish, after three straight yearly gains.
The U.S. Congress continued to seek an agreement to steer
clear of the so called "fiscal cliff" with only a few hours
remaining to act if a deal materializes.
Negotiations involving Vice President Joe Biden and Senate
Republican leader Mitch McConnell appeared to offer the last
hope for avoiding across-the-board tax increases and federal
budget cuts triggered at the start of 2013.
Fears that the U.S. economy might be pulled back into
recession by the tax hikes and spending cuts now mandated have
kept investors cautious as last-minute political wrangling
"The negative consequences of the fiscal cliff appear to be
too large to ignore, and overtures from both political parties
have been increasing," Jason Schenker, president of U.S.
consultancy Prestige Economics, said.
"Significant market moves are likely when the deal gets done
- or if no deal is done before the year-end ... In any case,
neither outcome is fully priced in."
Brent February crude dipped 18 cents to $110.44 a
barrel at 10:54 a.m. EST (1554 GMT), heading for a third
straight lower settlement, having fallen to $109.38 before
pushing back above the 200-day moving average of $109.88.
Brent has averaged above $111 in 2012, on track to eclipse
the previous record daily average of $110.91 in 2011.
U.S. February crude was up 40 cents at $91.20 a
barrel, having fallen to $90.00 before recovering back above the
100-day moving average of $90.61.
Trading volume remained thinned by the year-end holiday
season. Total Brent volume was 68 percent under the 30-day
average, with U.S. turnover 80 percent below the 30-day average.
U.S. January RBOB gasoline and heating oil
slipped, but also in seesaw trading as the contracts approached
expiration at the end of Monday's session.
While Middle East turmoil and the West's ongoing dispute
with Iran over its nuclear program helping support oil prices
even as global economic growth sputtered, elevated oil prices
gave oil producer cartel OPEC a financial bonanza.
OPEC's oil export revenues hit a peak of $1.05 trillion, up
2.5 per cent from last year, U.S. government data showed.
Commodities found some support from economic data in China,
the world's second-largest economy and No. 2 crude oil consumer,
where factory activity in December expanded at its fastest rate
since May 2011, reinforcing hopes for revived growth.
But tepid global economic growth and ample supplies are
expected to keep a lid on oil prices next year, with crude
prices gradually slipping. Brent crude will average at $108 a
barrel in 2013, a Reuters monthly survey of 26 analysts showed.
Supply is increasing, with the United States pumping the
most oil in 19 years after shale oil discovery pushed output to
nearly 7 million barrels per day. U.S. crude imports slipped to
the lowest in 12 years.
Top oil exporter Saudi Arabia expects production increases
by other oil producers to weigh on energy prices in 2013,
potentially cutting into its fiscal surplus.
Saudi Finance Minister Ibrahim Alassaf said on Saturday the
kingdom ran a budget surplus of 387 billion riyals ($103.2
billion) in 2012 as high energy prices and strong output levels
generated revenue of 1.24 trillion riyals.
"The results of this year are exceptional," Alassaf told
Al-Arabiya television, but added, "The international conditions
and the increase in production by some states (in 2013) will
have negative effects on prices."
Political tensions in the Middle East are expected to keep
oil prices supported in 2013.
On Friday, Iran started six days of naval drills in the
Strait of Hormuz, a vital oil and gas shipping route, the
official IRNA news agency reported.
Iran has previously threatened to disrupt or close the
waterway if its nuclear sites are subjected to military attack
by Israel or the United States.
(Reporting by Robert Gibbons in New York, Christopher Johnson
in London and Florence Tan in Singapore; Editing by Nick