Oil ended the year steady at near $96 a barrel yesterday - up almost 58 per cent on its price 12 months ago, its largest annual gain this decade.

Trading was light in advance of today's holiday but the undercurrent of dwindling US fuel stocks and growing concern over global political events combined to keep the price high.

US crude edged 30 cents lower to $95.70 a barrel by the closure of UK markets, while London Brent crude gained 31 cents to $94.19.

This time last year the price of oil was around $61 a barrel but a rollercoaster year on the fuel markets saw it hit an all-time high of $99.29 on November 21 as a falling dollar and thinning inventories stoked investor interest.

Oil's rally is entering its seventh year, more than quadrupling its market value of below $20 at the start of 2002, and the expectation of the $100 a barrel mark remains a distinct possibility.

If prices hold, they will register their best performance for a front-month contract since 1999, when oil prices more than doubled from a $10 low.

Oil was set to average around $72.30 in 2007, up about nine per cent from 2006.

Political tensions have lately come back to the fore, with instability in nuclear-armed Pakistan depressing the dollar and lifting oil, and Iran's foreign minister saying the OPEC member aimed to start its first atomic power plant next year.

But prices fell 62 cents on Friday, ending a four-day rally, after data showing a nine per cent decline in sales of new US homes last month heightened fears the economy would slump into recession.

While oil prices have been buoyed by a slide in US crude stocks to below seasonal norms, some analysts are already looking beyond the peak demand winter season.

"We do see this squeeze starting to ease in the new year, as the peak of the heating season will pass in three to four weeks, more US refineries come back into service in 2008, and the focus shifts back to gasoline inventories," said First Energy Capital analyst Martin King.

In London, the market finished its final session of 2007 in negative territory as blue chips limped towards the end of what has been a difficult year for UK stocks.

The FTSE 100 Index closed down 20 points at 6456.9, marking a gain of 3.8 per cent over the year, which comes in stark contrast to the near 11 per cent rise seen in 2006.

London's leading share index had started the year in buoyant mood, but was hit by global turmoil since the summer as the credit crunch crippled financial markets. Geopolitical concerns fuelled by the assassination of Benazir Bhutto also weighed heavily on markets at year-end trading.

The FTSE 100 had been on track to smash its record of more than 6900 that was seen at the end of 1999 before the dot-com crash, scaling at one stage above 6700 earlier this year. As with oil, gold also fared well last year. It was on track for its biggest yearly gain since 1979, with prices hovering about $10 away from its historic highs.

The metal jumped more than 30 per cent during 2007 as a slide in the dollar, record high oil prices, credit market turmoil, falling US interest rates and geopolitical tension helped to increase its safe-haven appeal.

In the past few days, the metal has gained on speculative buying driven by dollar weakness and tensions in Pakistan.

"Certainly we are looking for a test of $850 very early in 2008. All the supportive factors are still there. The dollar is very much under pressure and we have got geopolitical tensions," said James Moore, precious metals analyst at TheBullionDesk.com.

Spot gold hit a seven-week high of $843.20 an ounce before falling to $834.70/835.40 yesterday, compared with $837.80/838.50 in New York late on Friday.