Global oil prices inched upward on Tuesday, rebounding slightly from earlier losses as an optimistic market outlook offered support despite subdued trading ahead of the Christmas holiday.
Brent crude futures rose by 42 cents, or 0.6 per cent, settling at $73.05 per barrel, while U.S. West Texas Intermediate (WTI) crude gained 38 cents, or 0.6 per cent, to reach $69.62 per barrel, according to Reuters.
Market analysts attributed the modest price gains to limited trading activity typical of the holiday season, with a stable short-term outlook.
“With reduced activity in the paper markets, participants are likely holding off until there is more clarity on 2024 and 2025 global oil balances,” FGE stated in a note.FGE in the note added that supply and demand dynamics in December have provided a less bearish perspective, though the market remains vulnerable to disruptions.
“Given how short the paper market is on positioning, any unforeseen supply disruption could trigger upward price spikes,” the analysts cautioned.
Neil Crosby, assistant vice president of oil analytics at Sparta Commodities, pointed to evolving views regarding long-term oil supply balances.
He cited the U.S. Energy Information Administration’s (EIA) latest short-term energy outlook, which predicts a draw in 2025 liquid balances despite anticipated increases in OPEC+ production.
“The consensus over 2025 liquid balances from major agencies is breaking down, indicating potential volatility,” Crosby remarked, suggesting this shift could reshape market trajectories in the coming months.
China, the world’s largest oil importer, added further optimism to the market with its announcement of a 3 trillion yuan ($411 billion) special Treasury bond issuance to boost its economy.
Analysts see this fiscal stimulus as a critical factor that could elevate energy demand in 2024.
“This move is likely to provide near-term support for WTI crude at around $67 per barrel,” Kelvin Wong, senior market analyst at OANDA, observed.
