Janice R. Andrews
Oil prices rose slightly in thin holiday trading, wrapping up 2024 with little change as the market prepares for a possible global surplus next year.
West Texas Intermediate (WTI) crude gained 1%, settling at $71.72 per barrel, with a modest 7-cent increase for the year. Brent crude rose 0.3% to $74.64, ending the year down 3.1%.
Crude prices saw support on Tuesday following signs of economic recovery in China, the world’s largest oil importer. China’s factory activity expanded for a third consecutive month, and President Xi Jinping confirmed the country is on track to meet its 5% GDP growth target for 2024.
Investor sentiment remains mixed. Bullish bets on WTI reached a four-month high in December, suggesting potential gains for early 2025. However, concerns about an oversupply of oil next year are weighing on market expectations, with some banks predicting further price declines over the next two years.
Geopolitical risks may provide short-term support for oil prices. Escalating tensions in the Middle East or Ukraine, along with potential U.S. sanctions on Iran, could disrupt supply and lift prices.
“I’m not fully buying into this overwhelming bearishness,” said John Driscoll, founder of JTD Energy Services. He emphasized the possibility of oil producers maintaining discipline on supply and warned that unexpected disruptions, such as geopolitical events or severe weather, could impact the market.
As 2025 approaches, oil prices remain caught between economic recovery optimism and concerns about oversupply, leaving investors cautious but alert to potential market shifts.
