Oil prices rise by 1% before the holidays
Kyiv • UNN
Brent crude rose to $73.58 and WTI to $70.10 per barrel due to expectations of a reduction in supplies. Analysts predict stable prices and rising demand in the coming months amid Chinese stimulus.
Oil prices rose by more than 1% before the holidays, recovering losses in the previous session. This growth was driven by an optimistic short-term outlook, with expectations of a slight reduction in supply. Trading activity decreased due to the approaching Christmas and Hanukkah holidays, UNN writes with reference to Reuters.
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Futures for Brent crude oil settled at $73.58 per barrel, up 95 cents, or 1.3%. U.S. WTI crude oil closed at $70.10 per barrel, up 86 cents, or 1.2%.
FGE analysts predict that oil prices will remain close to current levels in the near future. They noted that activity in financial markets declines during the holidays, and market participants refrain from taking active action, waiting for clarity on the global oil balance in 2024-2025. Changes in supply and demand in December support their less bearish stance, as stated in the FGE analysts' note.
"Given how short the paper market is in terms of positioning, any supply disruptions could lead to upward spikes in the structure," they added.
Some analysts have also pointed to signs of rising oil demand over the next few months.
"The year is ending with the consensus of the major agencies on long-term liquids balances through 2025 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 for 2025 recently shifted toward a draw, despite the fact that OPEC+ will continue to produce barrels of oil next year," Crosby said.
Prices were also supported by China's plan to issue 3 trillion yuan ($411 billion) worth of special treasury bonds next year, as Beijing steps up fiscal stimulus to revive the economy.
According to Calvin Wong, senior market analyst at OANDA, the Chinese stimulus is likely to provide short-term support for WTI at $67 per barrel. Markets will also be watching the US economy, the world's largest oil consumer.
While consumer confidence weakened in December, new orders for major U.S.-made capital goods rose in November amid strong demand for machinery, and new home sales rebounded, indicating that the U.S. economy is on solid footing as the year ends, the publication writes.
On Wednesday, December 25, the US markets will be closed, and there will be no report on the global oil market that day.
