US government reopening hopes boost WTI crude oil to challenge the $60 level

Market Expectations Push Oil Prices Higher

On Wednesday, Asian session WTI traded around $60.85, continuing its upward trend. The market sentiment has improved as prospects of a US government shutdown ending have increased risk appetite among investors. President Donald Trump expressed support for a bipartisan agreement, raising the likelihood that government funding will be restored by January 30. This development is expected to lead to a recovery in demand from airlines and the transportation sector, boosting crude oil consumption.

Supply Disruptions from Russia as a Major Support Factor

The US has intensified sanctions on Russia’s major oil companies, Lukoil and Rosneft, adding uncertainty to the global supply chain. Additionally, Indian refineries are reducing their purchases of Russian crude oil, further fueling supply-side concerns. Rebecca Babin, a senior energy trader at CIBC Private Wealth, noted that fears of supply disruptions from Russia are positively impacting crude oil prices.

Balancing Supply Increases and Demand Recovery

Meanwhile, OPEC+ plans to increase output by 137,000 barrels per day in December, while postponing additional production increases in the first quarter of next year. This could act as a short-term factor contributing to concerns over oversupply.

The weekly crude oil inventory data from the US Energy Information Administration (EIA) and OPEC’s November Monthly Oil Market Report (MOMR) are expected to determine the market’s future direction.