By Katya Golubkova and Trixie Yap
(Reuters) – Oil prices rose on Tuesday, recovering the losses of the previous session, encouraged by the short-term market outlook, despite the light trade ahead of the Christmas holiday.
futures rose 42 cents, or 0.6%, to $73.05 a barrel, and US West Texas Intermediate crude futures rose 38 cents, or 0.6%, to 69.62 a barrel on 0742 GMT.
FGE analysts said they expect benchmark prices to fluctuate around current levels in the short term “as activity in paper markets slows down during the holidays and market participants remain on the sidelines until they get a clear view of the 2024 and 2025 world oil balance.”
Supply and demand changes in December have supported their current less bearish outlook so far, analysts said in a note.
“Given how short the paper market is in the region, any supply disruption could lead to an increase in construction,” they added.
Some analysts are also pointing to signs of a look for oil in the next few months.
“The year ends with consensus from major agencies that by 2025 the long-term liquid balance is beginning to deteriorate,” said Neil Crosby, vice president of oil at Sparta Commodities, in a note. “EIA's STEO (short-term energy outlook) has just moved their 2025 oil supply to a draw even as they continue to restore OPEC+ barrels next year.”
A plan by China, the world's biggest oil importer, to issue 3 trillion yuan ($411 billion) worth of special oil bonds next year, as Beijing ramps up fiscal stimulus to revive the faltering economy, also supports prices.
This is likely to provide near-term support for WTI crude at $67 a barrel, said OANDA senior analyst Kelvin Wong.
Markets will also monitor the economic impact from the United States, the world's largest oil consumer, which released a mixed bag of data overnight. .
On the other hand, new orders for U.S. manufactured goods increased in November amid strong demand for machinery, while sales of new homes also rebounded, suggesting the U.S. economy was on solid footing as the year closed.