Global Oil Prices Rise To $73.05/ Barrel As Market Prepares For 2024 Outlook

Global oil prices rose on Tuesday, recovering from earlier losses. Brent crude futures gained $0.42, settling at $73.05 a barrel, while U.S. West Texas Intermediate (WTI) crude added $0.38 to reach $69.62 a barrel. Analysts attributed the slight increase to improved market sentiment and reduced trading activity ahead of the Christmas holiday.

A report by FGE highlighted limited price movement due to holiday trading patterns. “With market participants staying on the sidelines until they get a clearer view of 2024 and 2025 global oil balances, prices are likely to remain stable,” the analysts explained.

Market Sentiment Supports Global Oil Prices

Market analysts have observed a shift in sentiment regarding global oil prices as the year closes. Neil Crosby, assistant vice-president of oil analytics at Sparta Commodities, noted, “Major agencies are revising their forecasts for 2025 liquid balances, indicating a shift from earlier bearish expectations.”

The U.S. Energy Information Administration’s recent energy outlook also supports this view, predicting a draw in 2025 liquid balances despite anticipated increases in OPEC+ production.

China’s economic measures have further boosted market optimism. The country’s announcement of a 3 trillion yuan ($411 billion) stimulus plan aims to revitalize its economy, the world’s largest oil importer. “This move will likely drive energy demand and provide near-term support for WTI crude,” said Kelvin Wong, senior market analyst at OANDA.

Economic Indicators in the U.S. and Their Impact on Oil Prices

Positive economic signals from the United States, the world’s largest oil consumer, have also influenced global oil prices. Recent data showed a surge in new orders for capital goods and a rebound in new home sales. These developments suggest resilience in the U.S. economy, supporting oil demand.

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While uncertainties surrounding global economic policies remain, analysts foresee potential gains for oil as 2024 approaches.

Nigeria Responds to Shifts in Global Oil Prices

In Nigeria, the Nigerian National Petroleum Company (NNPC) Limited recently reduced the ex-depot price of Premium Motor Spirit (PMS) from ₦1,020 to ₦899 per litre. This decision aligns with the government’s fuel sector deregulation efforts, fostering competition among oil marketers and offering potential cost savings for consumers.

Despite this local reduction, the slight increase in global oil prices could influence Nigeria’s domestic market. Analysts predict that PMS prices might decline further by January 2025 due to a combination of lower crude oil prices and the strengthening naira.

However, the extent of local price adjustments will depend on global market trends in the coming months.

Outlook for Global Oil Prices in 2024

As the year concludes, market participants remain cautious about long-term forecasts for global oil prices. While supportive supply and demand dynamics have mitigated bearish outlooks, potential volatility could arise from unexpected supply disruptions.

Analysts emphasize the importance of monitoring global economic signals and energy policies to navigate the complexities of the oil market in 2024.