Oil Prices Gain as U.S. Government Reopening Boosts Demand Outlook

Oil markets edged higher on Monday as renewed hope that the United States Federal Government shutdown will soon end bolstered demand expectations in the country, the world’s largest oil consumer.

By 04:26 GMT, Brent crude futures had risen 45 cents, or about 0.71 percent, to reach $64.08 a barrel. Meanwhile, West Texas Intermediate (WTI) rose 48 cents, or 0.80 percent, to $60.23 a barrel.

Analysts point to the near-end of the shutdown — now entering its 40th day — as the key driver. The Senate moved toward a vote on reopening the federal government, which would restore pay to roughly 800,000 federal workers and restart vital services, thereby lifting consumer confidence and economic activity.

According to Tony Sycamore of IG Group, the reopening “should also help improve risk sentiment across markets” and may push WTI prices up toward the $62 mark.

However, supply-side concerns remain. Last week both Brent and WTI fell about 2 percent, marking their second consecutive weekly decline, amid fears of a global supply glut.

Key factors behind the oversupply risk include:

The Organization of the Petroleum Exporting Countries and allies (OPEC+) agreeing to a modest production increase in December, while also pausing further hikes into the first quarter of next year.

Rising U.S. crude inventories and a doubling of floating oil storage in Asian waters, driven by tightened Western sanctions that reshaped flows to China and India.

Disruptions at major Russian producer Lukoil as U.S. companies face a November 21 deadline to cut business ties, and a collapsed acquisition by Swiss trader Gunvor.
Reuters

A U.S. exemption granted to Hungary for one year allowing continued Russian oil imports, which further adds to supply uncertainty.