Oil was lower but held above $78 in Asian trade today, with investors expecting that continued cold weather in the United States, the world's biggest energy consuming nation, will boost demand.
New York's main futures contract, light sweet crude for delivery in February, was at $78.59 a barrel in morning trade, down 18 cents from the previous day.
Brent North Sea crude for February eased seven cents to $77.25.
Analysts said expectations of robust demand for heating fuel during the northern hemisphere winter should boost demand, leading to higher prices.
"Last week, crude made the largest advance in several weeks, supported by the biggest drop in stockpiles since September, which is expected to continue and produce a year-end price near $80," said Mike Fitzpatrick at MF Global.
"With unseasonable cold forecast to continue into January, this could very well be the case, as consumption of heating fuels increase."
The latest US energy inventory report to be released on Wednesday is likely to indicate strong demand in the world's biggest economy.
Other analysts said geopolitical tensions sparked by the crackdown on protests by major oil producer Iran and renewed terrorism fears after a failed attempt to blow up a US airliner could also affect the market going into the year's end.