(RTTNews) – Crude oil rose on Tuesday as the end of last week’s U.S. government shutdown helped boost energy and oil demand, allaying concerns about excess supply.
WTI crude oil for December delivery was last seen trading up $0.90 (or 1.49%) at $60.80 a barrel.
The shutdown that started in America on October 1 ended last Thursday.
The economy stalled, with 750,000 federal employees losing their jobs and many agencies closing. However, the now reopening has raised hopes that the US will get back to business.
As the Thanksgiving holiday season approaches, demand for energy and consumption is projected to increase.
This again brought enthusiasm in the markets which led to a rise in oil prices.
On October 22, the US announced sanctions on Russian oil exports, targeting oil corporations Rosneft and Lukoil. America had given a deadline of November 21 to all the countries to end trade relations with these two oil companies.
To put pressure on Russia, the Senate is introducing legislation to impose severe sanctions on Russia’s trading partners, which has the assent of the President.
So far, Russia has disregarded the sanctions and continued its aggression against Ukraine. In retaliation, Ukraine has targeted about 28 refineries over the past three months.
Yesterday, the US Treasury’s Office of Foreign Assets Control said the sanctions announcement was having an impact on Russian revenues, forcing Russia to sell at discounted prices.
Supply-side concerns remain for Russian oil.
According to a Reuters report, based on official data calculations, China’s crude oil surplus stood at about 690,000 barrels per day in October, up from about 570,000 bpd in September. The world’s largest oil importer is apparently building a supply cushion to manage any future supply disruptions in the oil market.
After two years of cuts, OPEC+ is increasing production. However, at its last meeting on November 2, the cartel agreed to freeze production increases for the first quarter, 2026.
The decision was seen as an indicator that the group agreed that the demand growth outlook would be slower than expected. For December, the alliance is adding only a modest 137,000 bpd to its total output.
In its latest monthly oil market report, the cartel expected non-OPEC supply growth to reach 1.3 million barrels per day in 2026, while global demand was expected to rise by 1.6 million barrels per day.
It is noteworthy that OPEC Secretary General Haitham Al Ghais said today that OPEC does not anticipate an oil supply surplus for 2026.
The United Nations Security Council has supported the Gaza peace plan proposed by US President Donald Trump. While Israel has called for the expulsion of Hamas from Palestine, Hamas has rejected the UN resolution.
The market is now eyeing the US Energy Information Administration report to be released tomorrow to track oil reserves in the US.
The US Federal Reserve is set to announce its next decision on interest rates in December, which will impact the value of the US dollar.
Analysts believe that in the short term, oil prices will be influenced by changes in the value of the US dollar as well as Russia’s reaction to oil sanctions.
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