Brent crude will average $105 a barrel next year, not far below this year's record high average near $111, a Reuters poll found.

A quarter of analysts have reduced their forecasts since a similar poll a month ago because of worries about the impact of the euro zone debt crisis on economic growth.

But respondents think oil will remain expensive because of worries about supplies from producers Iraq and Kazakhstan and the possibility that tighter sanctions could curb Iranian oil sales. Low crude stocks and strong diesel demand also are supporting prices.

'We expect a mild recession across the OECD next year to put a damper on demand and consequently prices,' David Wech from Vienna-based consultants JBC Energy said. 'Nevertheless, the risk to oil prices is definitely on the upside given a still troubled geopolitical environment.'

Downside risks include EU debt, the return of Libyan crude output and weak global demand for gasoline and naphtha.

The monthly poll of 32 analysts and consultants put the average forecast for Brent crude futures for 2012 at $105.20 per barrel, down from a year-to-date average price in 2011 of $110.90. The new consensus is $1.80 lower than the $107 a barrel recorded in November's poll. Brent traded just above $107 on Wednesday.

The poll found that US light crude oil would average $97.00 per barrel, a revision up from $96.50 a barrel in November's poll. US crude has averaged $94.90 a barrel so far this year.

While 22 of the 32 analysts kept Brent forecasts this month unchanged, seven respondents cut projections.

'We expect further price weakness in 2012 due to a combination of weak global demand, fading supply constraints, low risk appetite and continued recovery in the US dollar,' said Julian Jessop at Capital Economics.

Both Opec and the International Energy Agency cut their demand growth forecast in December on worries that the economic outlook was weakening.

Opec said that austerity measures in the euro zone and other developed economies risked denting consumption in India and China.

'A relatively high supply and a lower than expected demand means prices will go further down,' wrote LBBW's Frank Schallenberger, who has a target for Brent at $90 a barrel.

Brent peaked in April at $127.02 a barrel as unrest in Libya cut supplies from the Opec member, short of August 2008's all-tine high of $147.50.

Prices are at risk on the upside from worries about the political situation in Kazakhstan, Iraq and Iran.

In Kazakhstan, hundreds of oil workers in the western oil-producing region of Zhanaozen protested after at least 15 people were killed in riots, piling pressure on President Nursultan Nazarbayev to relax his rigid authoritarian system.      

Brent-US spread

The poll found that the premium for Brent over US crude would average $8.20 a barrel next year, down sharply from an average of $15.7 in the year to date for 2011. The spread hit a record $28.10 in October and stood at just over $9 in favour of Brent on Wednesday.

The discount of US crude to rival benchmark Brent is expected to narrow as the reversal of the US Seaway pipeline gets underway and as the return of Libyan crude weighs on the European benchmark.

The reversal of the direction of oil flows on Seaway is expected from April next year, and will see barrels of crude move from the oversupplied Midwest storage tanks at Cushing to the US Gulf Coast refineries. – Reuters