Global oil prices inched higher on Tuesday, recovering from the previous session’s losses, as a slightly optimistic market outlook provided a boost despite light trading volumes ahead of the Christmas holiday.
Brent crude futures rose by 42 cents, or 0.6%, from $72.63 to settle at $73.05 per barrel, while U.S. West Texas Intermediate (WTI) crude futures gained 38 cents, or 0.6%, reaching $69.62 per barrel as of 0742 GMT, according to Reuters.
Analysts at FGE noted that benchmark prices are likely to remain stable around current levels in the short term due to reduced trading activity during the holiday season.
“As activity in the paper markets decreases and market participants remain on the sidelines until they gain a clearer view of global oil balances for 2024 and 2025, prices should see limited movement,” they said in a note.
The analysts pointed to supportive supply and demand dynamics in December, which contributed to a less bearish outlook.
“Given how short the paper market is on positioning, any supply disruption could lead to upward spikes in structure,” they added, suggesting potential volatility if unexpected events occur.
…As Market sentiment remains positive
Other market watchers shared a similar view, forecasting a positive trajectory for oil in the coming months. Neil Crosby, assistant vice-president of oil analytics at Sparta Commodities, highlighted shifting perspectives on long-term balances.
“The year is ending with the consensus from major agencies over long-term 2025 liquids balances starting to break down,” Crosby explained. He referenced the U.S. Energy Information Administration’s (EIA) latest short-term energy outlook, which now forecasts a draw in 2025 liquid balances despite expectations of increased OPEC+ production next year.
China’s recent announcement of plans to issue 3 trillion yuan ($411 billion) in special treasury bonds in 2024 to stimulate its struggling economy further bolstered market sentiment. As the world’s largest oil importer, China’s fiscal measures are expected to drive energy demand. “This is likely to provide near-term support for WTI crude at $67 per barrel,” said Kelvin Wong, senior market analyst at OANDA.
Attention is also turning to economic signals from the United States, the world’s largest oil consumer. Recent data showed a mixed picture but offered reasons for optimism. November saw a surge in new orders for key U.S.-manufactured capital goods, driven by strong demand for machinery. Additionally, new home sales rebounded, suggesting that the U.S. economy remains resilient as the year draws to a close.
While market participants remain cautious due to uncertainties surrounding the global economic outlook and energy policies, the pre-Christmas trading session reflects a market still poised for potential gains as 2024 approaches.
NNPC Reduces Petrol Price
In related news, the Nigerian National Petroleum Company (NNPC) Limited has announced a reduction in the ex-depot price of Premium Motor Spirit (PMS), commonly known as petrol, from ¦ 1,020 to ¦ 899 per litre.
This price cut is part of the government’s efforts to align with the competitive dynamics introduced by the deregulation of the fuel sector. It is expected to encourage increased competition among oil marketers, potentially leading to cost savings for consumers.
Analysts predict that PMS prices could fall further by the end of January 2025, citing factors such as a global decline in crude oil prices and the recent strengthening of the naira against the dollar.
However, it remains to be seen how the Nigerian market will respond to the recent uptick in global oil prices and whether local fuel prices will maintain their downward trajectory.