Oil gains on US government shutdown optimism
Oil prices rose on Monday on optimism that the U.S. 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 50 cents, or 0.79%, to $64.13 a barrel by 0916 GMT. U.S. West Texas Intermediate crude was at $60.28 a barrel, up 53 cents, or 0.89%.
The U.S. Senate on Sunday moved forward on a measure aimed at reopening the federal government and ending a now 40-day shutdown that has sidelined federal workers, delayed food aid and snarled air travel.
U.S. lawmakers’ first step in ending the shutdown helped the return of risk appetite to markets, PVM analyst Tamas Varga said.
Analysts were concerned about any impact from flight cancellations on U.S. jet fuel demand. Airlines canceled more than 2,800 U.S. flights and delayed more than 10,200 on Sunday in the worst day for disruptions since the start of a U.S. government shutdown.
Brent and WTI fell about 2% last week and notched their second weekly decline, on fears of a supply glut. The Organization of the Petroleum Exporting Countries and its allies, or OPEC+, agreed to increase output slightly in December, but it also paused further hikes in the first quarter.
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 quotas curbed demand from independent Chinese refiners.
There’s a decoupling between the rising volume of crude oil stored at sea and the increasingly limited availability of Russian products, PVM’s Varga said.
Russia’s Tuapse oil refinery in the Black Sea suspended fuel exports after drone attacks earlier this month, according to two industry sources and LSEG ship tracking data.
Russian oil producer Lukoil is facing mounting disruptions as a U.S. deadline for companies to cut off business with the Russian company looms on November 21 and after a hoped-for sale of the operations to Swiss trader Gunvor collapsed.
Source : Reuters.com
