Oil prices rose on Tuesday, reversing the prior session’s losses, buoyed by a slightly positive market outlook for the short term, despite thin trade ahead of the Christmas holiday.
Brent crude futures were up 74 cents, or 1%, at $73.37 a barrel, and U.S. West Texas Intermediate crude futures also rose 74 cents, or 1.1%, to $69.98 a barrel by 1400 GMT.
FGE analysts said they anticipated the benchmark prices would fluctuate around current levels in the short term “as activity in the paper markets decreases during the holiday season and market participants stay on the sidelines until they get a clearer view of 2024 and 2025 global oil balances.”
Supply and demand changes in December have been supportive of their current less-bearish view so far, the analysts said in a note.
“Given how short the paper market is on positioning, any supply disruption could lead to upward spikes in structure,” they added.
Some other analysts also pointed to signs of greater oil demand over the next few months. “The year is ending with the consensus from major agencies over long 2025 liquids balances starting to break down,” said Neil Crosby, Sparta Commodities’ assistant vice-president of oil analytics, in a note. “The EIA’s short-term energy outlook (STEO) recently shifted their 2025 liquids to a draw, despite continuing to bring back some OPEC+ barrels next year.” A plan by China, the world’s biggest oil importer, to issue 3 trillion yuan ($411 billion) worth of special treasury bonds next year, as Beijing ramps up fiscal stimulus to revive a faltering economy, was also supportive for prices.
That is likely to provide near-term support for WTI crude at $67 a barrel, said OANDA senior market analyst Kelvin Wong. Markets will also be watching the U.S. economy, the world’s largest oil consumer, which released a mixed bag of data overnight.
While consumer confidence weakened in December, new orders for key U.S.-manufactured capital goods surged in November amid strong demand for machinery and new home sales rebounded, suggesting the U.S. economy was on a solid footing as the year closes out.