Oil prices rise 1% in thin pre-holiday trade
6:38 pm Tuesday, December 24th, 2024
By Laila Kearney and Paul Carsten
NEW YORK/LONDON (Reuters) -Oil prices rose more than 1% on Tuesday, reversing the prior session’s losses on a brightening short-term outlook tied to the prospect of slightly tightening supplies as trade thinned ahead of the Christmas and Hanukkah holidays.
Brent crude futures settled at $73.58, rising 95 cents, or 1.3%. U.S. West Texas Intermediate crude futures settled at $70.10, rising 86 cents, or 1.2%.
FGE analysts said they expect the benchmark prices will fluctuate around current levels in the near 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 FGE 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 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,” Neil Crosby, Sparta Commodities’ assistant vice president of oil analytics, said in a note.
“The EIA’s short-term energy outlook recently shifted their 2025 liquids to a draw, despite continuing to bring back some OPEC+ barrels next year,” Crosby said.
U.S. crude oil and distillate stocks were seen falling last week by 3.2 million barrels and 2.5 million barrels, respectively, while gasoline stocks were seen rising last week, market sources said, citing American Petroleum Institute figures. Gasoline inventories were seen rising by 3.9 million barrels.
The figures come ahead of data from the Energy Information Administration, the statistical arm of the U.S. Department of Energy, at 1 p.m. EST (1800 GMT) on Friday.
Also supporting prices was 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.
China’s stimulus 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.
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.
U.S. markets will be closed on Wednesday, Dec. 25, and there will be no global oil market report for the day.
(Reporting by Laila Kearney in New York and Paul Carsten in London, Katya Golubkova in Tokyo and Trixie Yap in Singapore; Editing by Shri Navaratnam, Clarence Fernandez, Tomasz Janowski, Mark Porter, Leslie Adler and Rod Nickel)
