Oil prices climb as hopes rise for end to US shutdown and boost in demand

Oil prices edged higher on Monday as signs of progress toward ending the prolonged US government shutdown lifted investor sentiment, outweighing concerns about rising global supplies.

Brent crude saw a modest uptick, trading around $64.10 a barrel after rising 47 cents, while US benchmark WTI advanced by 50 cents to about $60.25. The recovery follows last week’s dip of nearly 2 percent, when growing concerns about a global surplus had weighed on prices.

Shutdown optimism fuels demand hopes

After 40 days of gridlock, the US Senate is reportedly moving closer to a deal that could reopen the federal government. Analysts say the move could help restore consumer spending and economic activity in the world’s largest oil-consuming nation.

Tony Sycamore, a market analyst at IG, said the potential reopening would “restore pay to hundreds of thousands of federal workers and restart key programmes that can lift confidence and demand.” He added that renewed optimism across markets could push WTI prices toward $62 a barrel in the near term.

Supply worries persist

Despite the brighter demand outlook, traders remain cautious about a possible supply glut. OPEC+ recently approved a modest increase in production for December but held off further hikes early next year to avoid flooding the market.

In the US, crude inventories have continued to rise, and the volume of oil stored on ships in Asian waters has nearly doubled in recent weeks. This buildup follows Western sanctions that restricted Russian crude exports to China and India, along with reduced import quotas for some Chinese refiners.

India, meanwhile, has been sourcing more oil from the Middle East and the Americas to fill the gap left by restricted Russian supplies.

Adding to the uncertainty, Russian oil producer Lukoil is reportedly facing disruptions ahead of a November 21 deadline for US companies to cut ties, after a failed attempt to sell assets to Swiss trader Gunvor.

Market watchers also noted that Washington’s decision to grant Hungary a one-year exemption from sanctions on Russian oil could further weigh on global balances.

Despite these mixed signals, analysts say sentiment has turned slightly positive as hopes grow for stronger US demand once the government fully reopens.