NEW YORK/LONDON: Oil prices were up on Tuesday, reversing the prior session’s losses on a brightening short-term market outlook tied to the prospect of slightly tightening supplies as trade thinned ahead of the Christmas and Hanukkah holidays.
Brent crude futures were up 88 cents, or 1.2%, at $73.51 a barrel, while U.S. West Texas Intermediate crude futures also rose 91 cents, or 1.3%, to $70.15 a barrel by 11:11 a.m. EST (1611 GMT).
FGE analysts said they anticipate that 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 analysts said in a note.
Oil prices ease on surplus concerns
“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 (STEO) recently shifted their 2025 liquids to a draw, despite continuing to bring back some OPEC+ barrels next year,” Crosby said.
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, also supported 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.
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.
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