Oil Prices Decline as U.S. Government Shutdown Approaches Resolution

Oil prices experienced a decline during trading on Wednesday, although they maintained most of the gains from the previous session. This comes amid expectations that the conclusion of the longest government shutdown in U.S. history could bolster demand in the world's leading crude-consuming nation.

Brent crude slipped by 0.49% to $64.84 per barrel, while U.S. West Texas Intermediate crude fell by 0.56% to $60.69, following a rise of over 1.5% on Tuesday.

The U.S. House of Representatives is scheduled to vote today on a bill aimed at funding government agencies through the end of January. This development could restore economic activity and enhance consumer confidence, potentially increasing energy and fuel consumption as the holiday season approaches.

On the supply front, U.S. sanctions against Russian oil companies "Lukoil" and "Rosneft" are beginning to impact the markets. Asian refining firms, such as China's "Yanchang Petroleum," are seeking alternative crude supplies, which has provided some support for prices.

Additionally, the International Energy Agency (IEA) in its annual report has projected that global demand for oil and gas will continue to rise until 2050. This revision reflects a shift in expectations regarding a rapid transition to clean energy, particularly amid U.S. pressures to increase fossil fuel production.

Based on current policy scenarios, the IEA anticipates that global oil demand will reach 113 million barrels per day by mid-century, marking a 13% increase from 2024 levels. This indicates a sustained reliance on oil in the global economy, despite ongoing calls for a shift towards clean energy.