Dec 25 2024:Â Oil prices climbed over 1% on Tuesday, recovering from the previous session’s losses as a slightly tighter supply outlook buoyed market sentiment during reduced trading ahead of the Christmas and Hanukkah holidays.
Brent crude futures closed at $73.58, up 95 cents (1.3%), while U.S. West Texas Intermediate (WTI) crude settled at $70.10, rising 86 cents (1.2%).
Analysts at FGE noted that oil prices are expected to hover near current levels in the short term due to diminished market activity during the holiday season. “Market participants are likely to remain on the sidelines until they gain a clearer view of global oil balances for 2024 and 2025,” they explained.
FGE also highlighted the potential for price spikes if supply disruptions occur, given the short positioning in the paper market.
In addition, signs of increased oil demand in the coming months supported prices. Neil Crosby, assistant vice president of oil analytics at Sparta Commodities, remarked on a shifting consensus among major agencies about 2025 oil supply balances. He pointed to the U.S. Energy Information Administration’s recent outlook, which now projects a draw for 2025 liquids balances, even as some OPEC+ barrels return to the market.
U.S. crude oil and distillate inventories were projected to decline by 3.2 million barrels and 2.5 million barrels, respectively, last week, according to American Petroleum Institute data. However, gasoline inventories were expected to rise by 3.9 million barrels. Official figures from the Energy Information Administration are due Friday at 1 p.m. EST (1800 GMT).
China’s announcement of plans to issue 3 trillion yuan ($411 billion) in special treasury bonds as part of its fiscal stimulus measures also lent support to oil prices. The world’s largest oil importer aims to revitalize its slowing economy, with WTI crude likely to find near-term support at $67 per barrel, according to Kelvin Wong, senior market analyst at OANDA.
Meanwhile, mixed economic data from the United States, the world’s largest oil consumer, added complexity to the outlook. While consumer confidence weakened in December, November saw a surge in orders for key capital goods and a rebound in new home sales, indicating the U.S. economy remains resilient as the year concludes.
With U.S. markets closed on December 25 and no global oil market report expected for the day, investors are set to focus on broader market trends and upcoming data for further guidance.
