Crude Ends Volatile Year Below $45

"For 25 years I've been watching this market like a hawk and I've never seen a year like this nor would I anticipate a year like this," said Jim Ritterbusch, president of Ritterbusch and Associates.

Ritterbusch said excess liquidity early in the year spurred hedge funds to invest in oil, positions that they were forced to sell in the second half of the year as credit began to dry up.

Record prices at the pump slashed demand and Americans cut spending across the board. Americans drove more than 100 billion fewer miles between November 2007 and October 2008 than the same period a year earlier, making it the largest continuous decline in American driving in history, according to the Federal Highway Administration.

There are signs that Americans are returning to the pump slowly.

Ritterbusch notes that figures released Wednesday by the U.S. Energy Department's Energy Information Administration, show demand for gasoline fell 3.3% in 2008, but are down just 2.2% in the past four weeks.

Oil prices may have further to fall, however, before rebounding to an average of around $60 next year, Ritterbusch said.

That would suggest the economic climate improves.

The government said Wednesday that the number of newly laid off workers signing up for unemployment benefits fell sharply last week but those continuing to draw aid climbed to the highest level since 1982.

The Labor Department reported Wednesday that first-time applications filed for jobless benefits dropped by a seasonally adjusted 94,000 to 492,000 for the week ended Friday.