Oil traders expect $100-a-barrel prices

NEW YORK -- Oil prices ended the year near $96 a barrel, or 57 percent higher than where they began 2007, and analysts expect rising demand and geopolitical instability to keep upward pressure on energy costs early in 2008.

"There's a good chance this week that we'll see some record highs," said Jim Ritterbusch, president of Ritterbusch and Associates in Galena.

A record-breaking year for energy futures ended quietly Monday, with oil futures declining 2 cents to settle at $95.98 a barrel on the New York Mercantile Exchange.

Oil reached a trading record of $99.29 on Nov. 21 and remains close to the range of inflation-adjusted highs set in early 1980. Depending on how the adjustment is calculated, $38 a barrel then would be worth $96 to $103 or more today.

Crude futures averaged $72.41 in 2007, compared with $66.25 in 2006, and had their the biggest percentage gain since 1999, when prices more than doubled to $25.60 a barrel.

Crude futures rose in 2007 as demand from booming economies in Asia grew while American motorists continued to hit the road in record numbers, sending gas prices above $3 a gallon for the third straight year.

Other factors influencing energy prices were the West's standoff with Iran over its nuclear program, attacks by Nigerian rebels on that oil-rich nation's crude infrastructure and Turkish attacks on Kurdish rebels in northern Iraq, which sparked concerns the rebels would retaliate by attacking an oil pipeline. The recent assassination of Pakistani opposition leader Benazir Bhutto has exacerbated worries about global instability.

Pump prices nationally averaged $2.79 a gallon in 2007, compared with $2.57 a gallon in 2006, a gain of 8.6 percent.

According to AAA, the average price of a gallon of unleaded gas in the Chicago area Monday was $3.167. The highest average for the area recorded by AAA this year came in mid-May, at $3.66.

Higher prices are cutting demand growth. The Energy Department's Energy Information Administration recently cut its global demand growth projections for oil to 87.2 million barrels a day from an earlier forecast of 87.5 million barrels a day. The EIA left domestic gasoline demand growth projections for next year unchanged at up 1 percent.