Oil prices climbed on Monday amid optimism that the prolonged U.S. government shutdown could soon end, boosting demand prospects in the world’s largest oil-consuming nation and improving market sentiment despite concerns over rising global supplies.
Brent crude futures gained 47 cents, or 0.74%, to trade at $64.10 a barrel by 0123 GMT, while U.S. West Texas Intermediate (WTI) crude rose 50 cents, or 0.84%, to $60.25.
The gains came as the U.S. Senate prepared to vote on reopening the federal government after a historic 40-day shutdown. Analysts said a resolution would restore pay to about 800,000 federal workers and revive key economic activities that have been stalled.
“The imminent reopening is a welcome boost, restoring pay to federal employees and restarting vital programs that will lift consumer confidence, activity, and spending,” said Tony Sycamore, market analyst at IG.
“This should also help improve risk sentiment across markets and could push WTI prices toward $62 a barrel.”
Both Brent and WTI crude benchmarks fell about 2% last week, marking their second consecutive weekly decline amid fears of oversupply.
While the Organization of the Petroleum Exporting Countries and its allies (OPEC+) agreed to a modest output increase in December, the group paused further hikes for the first quarter of next year to avoid exacerbating a potential glut.
Adding to the supply concerns, U.S. crude inventories have risen, and the volume of oil stored on ships in Asian waters has doubled in recent weeks.
The buildup follows tightening Western sanctions that have reduced Russian oil exports to China and India, while Beijing’s shortage of import quotas has curbed purchases by independent refiners.
Indian refiners, facing restricted access to Russian oil, have increased imports from the Middle East and the Americas. Meanwhile, Russian producer Lukoil is grappling with growing disruptions as a U.S. deadline looms for companies to end dealings with it by November 21, following the collapse of a proposed sale to Swiss trader Gunvor.
Analysts said U.S. President Donald Trump’s recent decision to grant Hungary a one-year exemption from sanctions on Russian oil imports also added to concerns about global oversupply.
Despite these headwinds, traders said expectations of renewed U.S. government spending and stronger economic activity were helping to steady oil markets at the start of the week.
Source: Reuters
Written By Rodney Mbua
