Oil Prices Rise Amid Optimism Over U.S. Government Shutdown Resolution
Global oil prices experienced a notable rise on Monday, fueled by optimism surrounding the potential resolution of the U.S. government shutdown, which may stimulate demand in the world's largest oil consumer and alleviate prior concerns about oversupply.
In this context, Brent crude futures increased by 0.71% to $64.08 per barrel, while West Texas Intermediate futures rose by 0.8% to $60.23 per barrel.
This uptick coincides with a Senate vote on Sunday aimed at reopening the federal government, ending a shutdown that has lasted for 40 days.
Commenting on the situation, Tony Sycamore, a market analyst at the International Crisis Group, told Reuters: "The impending reopening is a welcome boost, as it will restore pay for 800,000 federal employees and reactivate essential programs, strengthening consumer confidence and spending."
Sycamore added, "This should also enhance market risk appetite and drive West Texas Intermediate prices to around $62 per barrel."
It is important to note that oil prices, represented by Brent and West Texas Intermediate, fell by approximately 2% last week, marking the second consecutive decline due to investor concerns over oversupply in the global market.
Price pressures remain on the supply side, as data indicates that the volume of crude oil stored on ships in Asian waters has doubled in recent weeks. This increase is attributed to intensified Western sanctions that have reduced imports for both China and India. Additionally, a lack of import quotas has decreased demand from independent Chinese refineries, exacerbating oversupply concerns.
Furthermore, the OPEC+ alliance had previously agreed to a moderate production increase last December, while additional increases for the first quarter of this year have been suspended to maintain market balance.
