Oil prices rose on Monday on optimism that the US government shutdown could end soon and lift demand in the world’s top oil consumer, offsetting concerns about rising supplies globally.
Brent crude futures rose 47 cents, or 0.74 per cent, to $64.10 a barrel by 0123 GMT. US West Texas Intermediate crude was at $60.25 a barrel, up 50 cents, or 0.84 per cent.
An end to the historic US government shutdown, now in its 40th day, is within reach as the Senate on Sunday moved toward a vote on reopening the federal government.
“The imminent reopening is a welcome boost, restoring pay to 800,000 federal workers and restarting vital programs that will lift consumer confidence, activity and spending,” IG market analyst Tony Sycamore said.
“This should also help improve risk sentiment across markets” and cause a rebound in WTI prices toward $62 a barrel, he said.
Brent and WTI fell about 2 per cent last week and notched their second weekly decline, on fears of a supply glut. The Organization of the Petroleum Exporting Countries and their allies, or OPEC+, agreed to increase output slightly in December, but it also paused further hikes in the first quarter, wary of a supply glut.
Crude inventories are also on the rise in the United States while the volume of oil stored on board ships in Asian waters has doubled in recent weeks after tightening Western sanctions curtailed imports to China and India and as a shortage of import quota curbed demand from independent Chinese refiners.
Indian refiners have turned to the Middle East and the Americas to replace sanctioned Russian supply.
Russian oil producer Lukoil is facing mounting disruptions as a US deadline for companies to cut off business with the Russian oil company looms on November 21 and after a hoped-for sale of the operations to Swiss trader Gunvor collapsed.
US President Trump’s decision to grant Hungary a one-year exemption from US sanctions on Russian oil imports added to global oversupply concerns, Sycamore said.
