Oil prices retreated after rising as markets anticipated the reopening of the US government, but held on to most of their gains from the previous session on expectations that the end of the longest-ever US government shutdown could boost demand in the world’s largest crude-consuming nation.
Brent crude futures fell 22 cents, or 0.34%, to $64.94 a barrel by 06:25 GMT after gaining 1.7% on Tuesday. WTI fell 22 cents, or 0.36%, to $60.83 a barrel after rising 1.5% in the previous session.
The Republican-controlled US House of Representatives is set to vote on a bill approved by the Senate on Wednesday afternoon that would restore funding to government agencies until January 30.
The reopening of the government will boost consumer confidence and economic activity, boosting demand for crude oil.
The end of the US government shutdown, which disrupted tens of thousands of flights, also points to a recovery in travel and jet fuel consumption ahead of the upcoming holiday season.
The International Energy Agency (IEA) projected in its annual World Energy Outlook report released on Wednesday that oil and gas demand could continue to grow until 2050.
This forecast differs from the IEA’s previous expectation that global oil demand would peak this decade. The agency has shifted from a forecasting methodology based on climate commitments to one that only considers current policies.
The Organization of the Petroleum Exporting Countries (OPEC) and the US Energy Information Administration (EIA) will release their monthly outlooks on Wednesday.
On the supply side, the effects of US sanctions on Lukoil and Rosneft are emerging, further supporting prices.
Chinese refiner Yanchang Petroleum is seeking to source supplies from outside Russia in its latest crude oil tender, and Sinopec subsidiary Luoyang Petrochemical has shut down for maintenance, an indirect consequence of the sanctions.
These measures, taken last month, were the first direct sanctions imposed on Russia by Trump since the start of his second term.