(RTTNews) – Crude oil soared on Tuesday as the end of the U.S. government shutdown last week has accelerated expectations of brisk energy and oil demand, overriding persisting excess supply concerns.
WTI Crude Oil for December delivery was last seen trading up by $0.90 (or 1.49%) at $60.80 per barrel.
In the U.S., the shutdown that began on October 1 came to an end last Thursday.
The economy came to a standstill with 750,000 federal employees out of a job and several agencies closed. However, the reopening has now accelerated expectations that the U.S. would be back in business.
As the Thanksgiving holiday season is nearing, the demand for energy and consumption is anticipated to increase.
This renewed the impetus in markets supporting oil prices on the upside.
On October 22, the U.S. announced sanctions on Russian oil exports, targeting oil corporations, Rosneft and Lukoil. The U.S. gave November 21 as a deadline for all countries to wrap up trade relations with these two oil companies.
To add pressure to Russia, the Senate is bringing forward legislation, which has the consent of president, to severely sanction Russia’s trading partners.
So far, Russia has defied sanctions and is ceaselessly pursuing its aggression against Ukraine. In retaliation, over the past three months, Ukraine has targeted nearly 28 refineries.
Yesterday, the U.S. Treasury’s Office of Foreign Assets Control stated that the sanction announcement is having the intended effect on denting Russian revenues, with Russia compelled to sell at discounted prices.
Supply side concerns continue to remain for Russian oil.
According to a Reuter’s report, China’s surplus of crude oil was about 690,000 barrels per day in October, up from about 570,000 bpd in September, based on official data calculations. The world’s largest oil importer is apparently building a supply cushion to manage any future supply disruption in the oil market.
After two years of cuts, OPEC+ has been scaling up production. At its last meeting on November 2, however, the cartel agreed to pause output hikes for the first quarter, 2026.
The decision was seen as an indicator that the group was in agreement that the demand growth outlook would be slower than expected. For December, the alliance is adding only a modest volume of 137,000 bpd to its total output.
In its latest monthly oil market report, the cartel expected non-OPEC supply growth in 2026 to hit 1.3 million barrels daily, while global demand was expected to grow at 1.6 million barrels daily.
Of note, the secretary-general of OPEC, Haitham al Ghais today stated that OPEC does not project an oil supply surplus for 2026.
The Gaza Peace Plan proposed by U.S. President Donald Trump has been endorsed by U.N. Security Council. While Israel has called for the expulsion of Hamas from Palestine region, Hamas has rejected the U.N. resolution.
Markets are now eyeing the U.S. Energy Information Administration’s report to be released tomorrow to keep track of oil inventories in the U.S.
The U.S. Federal Reserve is set to announce its next decision on interest rates in December, which would impact the U.S. dollar value.
Analysts feel that in the short-term, oil prices would be impacted by the a change in the value of U.S. dollar as well as Russia’s response to oil sanctions.
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