Oil: Highest Annual Average in 15 Years Friday December 29, 9:38 AM EST By Richard Mably LONDON (Reuters) - Oil prices eased on Friday for crude to finish the year some $2 cheaper than at the end of 1999 as dealers took the view that stocks will prove adequate to see the West through a spell of harsh winter weather.

London Brent blend futures dipped 37 cents to $23.34 a barrel in early afternoon trade. U.S. light crude was up one cents at $25.86.

With speculators exiting the market in anticipation of the elimination of an inventory deficit, Brent has slumped $12 from its mid-October peak.

But the North Sea benchmark crude still averaged $28.50 a barrel for 2000, up 58 percent from $18.03 last year to record the highest annual average for 15 years.

U.S. light crude futures averaged $30.20 for 2000, up from $19.25 last year and its highest since 1983.

The United States Department of Energy said on Thursday that U.S. commercial crude oil stocks had recorded a year-on-year surplus for the first time since April 1990.

U.S. inventories of 290.5 million barrels for the week ending December 22 still are low compared to most years but analysts expect inventories to build further in the first quarter.

Four OPEC production increases this year and the release by Washington of strategic reserves have cut the year-on-year U.S. crude inventory deficit over the past two months from 30 million barrels.

OPEC PREPARES TO ACT

Oil's recent decline has prompted calls from several OPEC members for production curbs ahead of the second quarter, when seasonal demand dwindles.

Five OPEC nations -- Indonesia, the United Arab Emirates, Kuwait, Iran and Libya -- have backed an output cut and some want a reduction of at least one million barrels a day.

Dealers now will be watching OPEC kingpin Saudi Arabia closely for clues on how much Riyadh thinks needs to be subtracted from cartel supplies to keep prices afloat at its preferred price of $25 a barrel.

An automatic reduction of 500,000 barrels daily could come before OPEC's January 17 meeting in Vienna if prices for a basket of cartel crudes stay below $22 for 10 successive business days.

The resumption of Iraqi oil sales to Europe has helped turn prices lower despite colder-than-normal winter weather in both the U.S. and continental Europe.

Iraq's first cargo from the Mediterranean since a dispute over pricing at the end of November finished loading on Friday at the Turkish port of Ceyhan.

Iraqi deliveries via pipeline across Turkey to Ceyhan resumed on Thursday, pipeline operator Botas said.

Shipments under the United Nations oil-for-food program resumed two weeks ago from the Iraqi Gulf port of Mina al-Bakr.

Dealers have shrugged off temperatures that are running below seasonal norms on both sides of the Atlantic.

The cold spell is forecast to continue at least into the first week of the New Year in large areas of the United States, the world's biggest energy guzzler.

Temperatures in continental Europe also are running below the seasonal norm but are forecast to become milder next week.

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-- Martin Thompson (mthom1927@aol.com), December 29, 2000