Brent crude climbs above $73, supported by optimism for 2024 oil outlook

Oil prices rebounded on December 24, reversing the losses of the previous session, as a slightly optimistic market outlook for the short term provided support, despite subdued trading volumes ahead of the Christmas holiday.

Brent crude futures rose by 47 cents, or 0.7%, to $73.10 per barrel, while US West Texas Intermediate (WTI) crude futures gained 46 cents, also 0.7%, reaching $69.70 per barrel by 0955 GMT, Caliber.Az reports.

Analysts at FGE forecasted that the benchmark prices would hover around current levels in the near term, as activity in the paper markets diminishes during the festive season, with market participants likely to remain on the sidelines until clearer insights into global oil balances for 2024 and 2025 emerge.

The analysts noted that changes in supply and demand this December have underpinned their less-bearish outlook for oil prices. They also highlighted that any supply disruption, given the thin positioning in the paper market, could trigger sharp upward movements in the market structure.

Other analysts pointed to indications of stronger oil demand in the months ahead. Neil Crosby, Assistant Vice-President of Oil Analytics at Sparta Commodities, remarked that major agencies were revising their 2025 liquid balances, with the consensus shifting towards tighter supply. The US Energy Information Administration (EIA) recently adjusted its short-term energy outlook (STEO) for 2025, forecasting a draw on liquid stocks, despite the continued return of OPEC+ barrels next year.

Further supporting prices was China's plan to issue 3 trillion yuan ($411 billion) in special treasury bonds next year as part of a fiscal stimulus programme aimed at reviving its struggling economy. This development is expected to provide near-term support for WTI crude around the $67 per barrel mark, according to Kelvin Wong, Senior Market Analyst at OANDA.

Meanwhile, attention remains focused on the US economy, the world's largest oil consumer. The release of mixed economic data overnight showed a surge in new orders for key US-manufactured capital goods in November, driven by robust demand for machinery. Additionally, new home sales saw a rebound, suggesting the US economy remains on solid footing as the year draws to a close.

By Aghakazim Guliyev