Oil was set to close the year up more than 12 per cent and average nearly $80 a barrel - the second highest on record - driven by a resurgence in global demand, an unusually cold winter and falling inventories.
After rallying since May to a 26-month high of $91.88 on Monday, U.S. crude edged lower on Friday, with the February contract down 30 cents at $89.54 a barrel.
The smaller-than-expected drawdown in U.S. natural gas and crude stocks pressured prices, offsetting upbeat economic data from the world's top oil user. Oil prices were set to average $79.60 this year, second only to 2008's record average of $99.75.
ICE Brent crude eased 19 cents to $92.90.
U.S. natural gas inventories fell last week by 136 billion cubic feet to 3.232 trillion cubic feet, the Energy Information Administration said, below market expectations.
"The 136 bcf net withdrawal was toward the lower end of the range of expectations and should be a test of whether the bears can reassert control of the market after the recent move higher," said Timothy Evans, energy analyst at Citi Futures Perspective.
U.S. natural gas futures traded 1.1 cents lower at $4.327 per million British thermal units.
Crude stocks in the world's largest economy also fell less-than-expected, easing by 1.26 million barrels to 339.43 million barrels in the week to Dec. 24, the EIA said.
Gasoline supplies fell by 2.32 million barrels, while distillate stocks rose 243,000 barrels.
"The latest U.S. weekly data release shows a continuation of the recent strength in oil demand," said analysts at Barclays Capital in a research note.
"December is set to be the strongest month of the year in demand terms, with particularly strong indications of gasoline demand."
Even with crude stocks slipping four straight weeks and prices peaking to a 26-month high of $91.88 a barrel earlier this week, OPEC output has risen only slightly in December as Nigerian supply increased, a Reuters survey found.
Supply from the 11 OPEC members with output targets has averaged 26.75 million barrels per day this month, up from 26.70 million bpd in November, the survey of oil companies, OPEC officials and analysts showed.
Core OPEC ministers have indicated they would not provide more oil supplies to arrest oil's rally, saying $100 crude was a fair price.
Oil found support from a weaker dollar and positive U.S. economic data.
The dollar languished against the Swiss franc, hitting an all-time low, and fell to a seven-week trough against the yen. The dollar index was down 0.14 per cent at 79.408.
The greenback declined despite supportive jobless claims and factory data that bolstered views the U.S. economy had gained momentum at the year-end and was set for a stronger performance in 2011.
The positive data could cause the U.S. Federal Reserve to curb its recent initiatives to spur economic recovery, which could strengthen the dollar and limit price boosts for dollar-denominated commodities.