Oil prices rose on Monday as optimism surrounding the possible resolution of the prolonged United States government shutdown boosted investor confidence and demand outlook in the world’s largest oil-consuming economy.
The gains came despite persistent concerns about rising global inventories and supply imbalances.
Brent crude oil, against which Nigerian crude oil is priced, gained 45 cents, or 0.71 percent to $64.08 per barrel by 05:26 a.m, while U.S. West Texas Intermediate (WTI) crude advanced 48 cents, or 0.80 percent to $60.23 per barrel.
The movement in prices reflects renewed market sentiment that an end to the record-long federal shutdown could soon restore normal economic operations and stimulate energy consumption.
The shutdown, now in its 40th day, has weighed on public-sector activity, delayed economic data releases, and dampened investor confidence across financial markets.
Shutdown Resolution Boosts Demand Outlook
According to Tony Sycamore, market analyst at IG Group, the potential reopening of government offices represents “a welcome boost, restoring pay to 800,000 federal workers and restarting vital programs that will lift consumer confidence, activity and spending.”
Sycamore added that a full reopening could help “improve risk sentiment across markets” and push WTI prices toward $62 per barrel in the near term.
The anticipated resumption of public spending and income flows is expected to drive short-term fuel demand growth, particularly across transport and industrial sectors that had experienced moderate contraction during the shutdown period.
Ongoing Supply Pressure from OPEC+ and Global Stockpiles
Despite Monday’s rebound, the broader oil market remains cautious after both benchmarks lost about 2 percent last week, marking their second consecutive weekly decline.
The losses were driven by renewed supply concerns as the Organization of the Petroleum Exporting Countries (OPEC) and its allies slightly increased output in December while pausing additional production hikes in the first quarter of 2025.
OPEC+ ministers said the decision reflected their intention to prevent a significant supply glut amid slower-than-expected demand recovery in Asia and rising non-OPEC output from the U.S. and Brazil.
In the United States, crude inventories have continued to expand, while floating storage volumes in Asian waters have more than doubled in recent weeks.
Analysts attribute the increase to sanctions restricting Russian oil sales to China and India, as well as a shortage of import quotas among independent Chinese refiners.
Geopolitical Developments Add Mixed Signals
Meanwhile, Russian producer Lukoil is facing operational challenges following the collapse of a planned sale of its overseas assets to Swiss trader Gunvor.
The setback comes as a U.S. deadline approaches for companies to cut ties with the Russian oil group by November 21, adding to uncertainty over future Russian supply flows.
Market watchers also highlighted the impact of Washington’s decision to grant Hungary a one-year exemption from sanctions on Russian oil imports, a move that analysts say could contribute marginally to global oversupply.
Market Outlook
While Monday’s price uptick signaled improving short-term optimism, analysts caution that sustained upward momentum will depend on concrete progress in Washington’s budget negotiations and evidence of stabilizing demand in major consuming economies.
Traders will continue to monitor inventory data from the U.S. Energy Information Administration (EIA) later this week for clearer insight into the direction of supply-demand balances.
Brent remains on course to test resistance around $65 per barrel, with WTI potentially rebounding to $62 per barrel if macroeconomic conditions improve. However, renewed stock build-ups or geopolitical supply shifts could limit gains and keep markets volatile through November.