Donald Trump signed legislation on Wednesday to officially end the longest federal government shutdown in U.S. history, less than two hours after the United States House of Representatives approved the measure. The bill passed the House by a margin of 222–209 and had already cleared the United States Senate earlier in the week.
The legislation restores funding for key federal operations, including food assistance programmes, federal-worker pay, and air-traffic control systems, which had been significantly disrupted during the 43-day shutdown.
For the oil markets, this development offers relief as the shutdown was weighing on demand in the world’s largest oil-consuming economy by curtailing federal activity, disrupting travel, and withholding key data. With the government reopening, there is potential for increased fuel consumption, particularly from aviation and ground transport ahead of Thanksgiving.
With most of that upside priced in after the Senate reached a deal on Sunday night, oil prices were trading lower in early asian trade on Thursday. With oversupply concerns continuing to dominate the broader oil market outlook, WTI was trading at $58.37 while Brent had slipped to $62.62.
So while the reopening of the government removes a key political risk and clears the way for modest demand support in the U.S., the overall picture remains bearish for oil markets. Traders will be watching today’s EIA inventory report closely, after the API reported a modest build on Wednesday.
By Charles Kennedy for Oilprice.com
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