By Laila Kearney and Paul Carsten
NEW YORK/LONDON (Reuters) -Oil prices rose more than 1% on Tuesday, reversing losses from the previous session on a more positive short-term outlook linked to the prospect of slightly tighter supply as trading ahead of the Christmas and Hanukkah holidays thinned out.
futures settled at $73.58, up 95 cents, or 1.3%. U.S. West Texas Intermediate crude futures settled at $70.10, up 86 cents, or 1.2%.
FGE analysts said they expect benchmark prices to hover around current levels in the near term “as activity in paper markets declines over the holidays and market participants remain on the sidelines until they get a clearer picture of global oil balances for 2024 and 2025.”
Changes in supply and demand in December support their current, less bearish view so far, the FGE analysts said in a note.
“Given how short the paper market is in terms of positioning, any supply disruption could lead to upward spikes in the structure,” she added.
Some analysts also pointed to signs of increased oil demand in the coming months.
“The year ends with major agency consensus on long liquidity balances starting to collapse in 2025,” Neil Crosby, assistant vice president of oil analysis at Sparta Commodities, said in a note.
“The EIA’s near-term energy outlook recently shifted their 2025 liquids to a draw despite continuing to cut some OPEC+ barrels next year,” Crosby said.
Oil and distillate inventories fell by 3.2 million barrels and 2.5 million barrels respectively, while gasoline inventories rose last week, market sources said, citing figures from the American Petroleum Institute. Gasoline inventories rose by 3.9 million barrels.
The figures come ahead of data from the Energy Information Administration, the statistical arm of the US Department of Energy, at 1pm EST (6pm GMT) on Friday.
Prices were also supported by a plan by China, the world’s biggest oil importer, to issue 3 trillion yuan ($411 billion) in special government bonds next year, as Beijing steps up fiscal stimulus to revive a flagging economy. to breathe life into.
China’s stimulus measures are likely to provide near-term support for WTI crude at $67 per barrel, said OANDA senior market analyst Kelvin Wong.
Markets will also watch the US economy, the world’s largest oil consumer, which posted a mixed bag of data.
While consumer confidence weakened in December, new orders for key U.S. manufactured capital goods rose sharply in November, while strong demand for machinery and new home sales recovered, indicating that the U.S. economy will recover by year’s end was on a solid foundation.
US markets will be closed on Wednesday, December 25, and there will be no global oil market report that day.
