New phase
Oil prices slipped amid expectations that the end of the longest U.S. government shutdown in history could boost demand in the world’s largest crude consumer. Brent crude futures fell 22 cents, or 0.34%, to $64.94 a barrel, after rising 1.7% the previous session. U.S. West Texas Intermediate (WTI) crude declined about 22 cents, or 0.36%, to $60.83 a barrel, after a 1.5% gain in the prior session.
That movement reflects expectations that the Republican-controlled U.S. House of Representatives plans to vote Wednesday afternoon on a bill, already approved by the Senate, that would restore government funding through Jan. 30.
Market expectations
The reopening of the U.S. government would boost consumer confidence and economic activity, which would in turn support oil demand, Tony Sycamore, market analyst at IG, wrote in a note.
The end of the shutdown — which in recent days has disrupted tens of thousands of flights — could also trigger a rebound in travel and jet-fuel consumption ahead of the holiday season.
In its annual World Energy Outlook, the International Energy Agency said global oil and gas demand could continue to grow through 2050. The projection marks a departure from the IEA’s previous forecast that global oil demand would peak this decade. The agency moved away from a forecast based on climate commitments back to a scenario that considers only existing policies, an approach last used in 2019, and found demand could increase roughly 13% by midcentury from 2024 levels.
OPEC and the U.S. Energy Information Administration are also scheduled to publish their monthly outlooks on Wednesday.
U.S. sanctions on Russia affect supply
On the supply side, markets are seeing the effects of U.S. sanctions on Russia’s two largest oil producers, Lukoil and Rosneft, which are providing additional support to prices.
China’s Yanchang Petroleum sought non-Russian crude in its latest tender, and Sinopec’s Luoyang Petrochemical subsidiary has shut for maintenance as an indirect result of the sanctions, Reuters reported Tuesday.
The measures last month were the first direct sanctions on Russia issued by U.S. President Donald Trump since the start of his second term.