US markets were closed for the New Year. Brent this year averaged $38.19, according to Reuters calculations, up 34 percent from $28.48 in 2003 and the highest annual level on record according to figures from oil major BP.
This year's Brent average was more than $2 up on a previous record of $35.69 set in 1980 after the Iranian revolution and at the outset of the Iran/Iraq war. Adjusted for inflation, 1980's average works out at $80 in today's money, according to BP.
Persistent concerns over supply security in Middle East and African producers helped drive this year's rally, which extended Opec producers' price boom into a sixth year.
Rapid demand growth in China, India and the United States forced the Organisation of the Petroleum Exporting Countries to pump at their highest level in 25 years, leaving little spare capacity to deal with unexpected outages.
Prices have dropped back 22 percent over the last two months on signals that higher fuel costs were beginning to weigh on economic growth.
Mild conditions during the US winter, rising US crude stocks and signs that gasoline supplies will be ample next year have prompted speculative funds to take money out of energy and pursue equity or money markets.
Weakening prices spurred Opec to trim 1 million bpd of excess supply from Jan. 1, hoping to cap a build in stocks that could drag prices lower when demand wanes after the northern winter.
"Keeping inventories low and the market tight seems a win-win policy for Opec, for it generates cash and does not require investment," said London's Centre for Global Energy Studies (CGES) in a report.
Sustained falls in the value of the dollar - reducing producers' purchasing power from oil sales denominated in the US currency - has strengthened Opec's resolve to stem the price falls. "Opec's preoccupation with the short-term and high prices is here to stay," said CGES.
Near-term oil price direction hinges on US weather, which will dictate heating oil demand in the Northeast, the biggest market for the fuel.
Lower-than-normal temperatures last week helped pull US heating oil stocks to a 12.4 percent deficit below last year. Milder weather this week may allow refiners to rebuild supplies.