As markets opened in Asia on Monday, crude oil prices were showing modest gains amid growing optimism that the United States Senate is set to advance a funding agreement that could end the federal government shutdown. At the time of writing, WTI had climbed to $60.08 while Brent was trading at $63.94, both up by roughly 0.5%.
Senate negotiators had reportedly struck a deal ahead of a Sunday evening session to begin advancing a House-passed continuing resolution. At least eight Democrats are prepared to vote in favour of advancing the funding measure, according to a source cited by CBS News.
The package under discussion would combine the continuing resolution with a “minibus” appropriations bundle (three long-term spending bills) and guarantee the Democrats a vote on extending health-insurance tax credits.
From a market perspective, the expectation that roughly 800,000 unpaid federal workers will soon see their salaries returned, benefit programs will restart, and key government services will resume is boosting sentiment. Speaking to Reuters, IG market analyst Tony Sycamore argued that the reopening prospect “should also help improve risk sentiment across markets”.
The optimism surrounding a deal can be seen on platforms such as Polymarket, which now has the odds of the shutdown ending between the 12th and 15th of November at 61%. Despite the rising confidence, a deal still faces plenty of hurdles. While the Senate appears close to a deal, approval by the United States House of Representatives has yet to be secured and will be needed before the longest government shutdown in history is brought to an end.
For oil markets, a government reopening should lead to improved domestic U.S. demand for goods and services (including energy) and the return of halted government spending, which can bolster crude demand. Additionally, improved risk appetite tends to reduce safe-haven premiums and can shift funds into commodities like oil.
By Charles Kennedy for Oilprice.com
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