Global oil prices saw a slight increase on Tuesday, recovering from the previous session’s losses as market optimism provided a boost, despite lower trading volumes ahead of the Christmas holiday. Brent crude futures gained 42 cents (0.6%), closing at $73.05 a barrel, while U.S. West Texas Intermediate (WTI) crude futures rose by 38 cents (0.6%) to settle at $69.62 a barrel, as of 0742 GMT, according to Reuters.
Analysts from FGE expect oil prices to remain stable around current levels in the short term due to the reduction in market activity during the holiday season. “With decreased trading in the paper markets and market participants waiting for clearer views of 2024 and 2025 global oil balances, price movements are expected to be limited,” they commented. Additionally, supportive supply and demand factors in December contributed to a less pessimistic outlook for oil prices.
However, analysts cautioned that any unexpected supply disruptions could lead to significant price fluctuations. “Given how short the paper market is on positioning, any supply disruption could lead to upward spikes in structure,” they warned, indicating potential volatility in the market.
Other market observers shared similar sentiments, predicting a positive trend for oil prices in the coming months. Neil Crosby, assistant vice-president of oil analytics at Sparta Commodities, noted that long-term oil balances were starting to shift. He referenced the U.S. Energy Information Administration’s (EIA) latest short-term energy outlook, which predicted a draw in 2025 liquid balances despite expectations for increased OPEC+ production next year.
Market sentiment was also boosted by China’s announcement of a plan to issue 3 trillion yuan ($411 billion) in special treasury bonds in 2024 to stimulate its economy. As the world’s largest oil importer, China’s fiscal policies are expected to drive energy demand. “This is likely to provide near-term support for WTI crude at $67 a barrel,” said Kelvin Wong, senior market analyst at OANDA.
Recent economic data from the U.S. also indicated resilience, with a rebound in new home sales and a significant increase in orders for key U.S.-manufactured capital goods. This data suggests that the U.S. economy, the world’s largest oil consumer, remains strong as the year ends.
Despite uncertainties regarding the global economic outlook and energy policies, the pre-Christmas trading session reflects a market poised for potential gains as 2024 approaches.
NNPC Reduces Petrol Prices in Nigeria Amid Global Oil Market Changes
The Nigerian National Petroleum Company (NNPC) Limited has lowered the ex-depot price of Premium Motor Spirit (PMS), commonly known as petrol, from ₦1,020 to ₦899 per litre. This reduction is part of efforts to align with the competitive dynamics of the deregulated fuel sector, which is expected to encourage more competition among oil marketers and reduce prices for consumers.
Analysts predict that PMS prices could decrease further by the end of January 2025, driven by factors such as a global decline in crude oil prices and the recent strengthening of the naira against the dollar.
However, it remains uncertain how the recent uptick in global oil prices will affect the Nigerian market and whether the local market will maintain the downward trend in fuel costs.