(Reuters) – Oil prices fell 1% on Wednesday, weighed down by oversupply in the market despite expectations that an end to the longest-ever U.S. government shutdown could boost oil demand.
Brent crude futures slipped 66 cents, or 1%, to $64.50 a barrel by 1232 GMT after gaining 1.7% on Tuesday. U.S. West Texas Intermediate crude was down 65 cents, or around 1.1%, at $60.39 a barrel, after climbing 1.5% in the previous session.
“Overall, both WTI and Brent remain well and truly stuck, with short-term speculative trading providing most of the activity,” said Ole Hansen, head of commodity strategy at Saxo Bank.
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Analysts have previously highlighted that crude oversupply is curbing price gains. Earlier this month OPEC+ agreed to a pause in increasing its output in the first quarter of next year, after having unwound its cuts to production since August this year.
But the reopening of the U.S. government could boost consumer confidence and economic activity, spurring demand for crude oil, IG market analyst Tony Sycamore wrote in a note.
The U.S. Republican-controlled House of Representatives is set to vote later on Wednesday on a bill, already signed off by the Senate, that would restore funding to government agencies through January 30.
“So while the long-term demand outlook remains robust, the short-term outlook still points to ample supply limiting the upside potential,” Saxo Bank’s Hansen added.
Meanwhile, the International Energy Agency forecast in its annual World Energy Outlook on Wednesday that oil and gas demand could continue to grow until 2050.
The projection was a departure from the IEA’s previous expectation that global oil demand would peak this decade, as the international body moved away from a forecasting method based on climate pledges back to one that takes into account only existing policies.
The Organization of the Petroleum Exporting Countries and the U.S. Energy Information Administration will also release their outlooks on Wednesday.
On the supply front, Russia has maintained a steady pace of oil shipments from its seaports at the start of November despite fresh U.S. sanctions imposed on the country’s largest oil companies, traders said and LSEG data shows.
Reporting by Colleen Howe in Beijing; Editing by Saad Sayeed, Emelia Sithole-Matarise and Jane Merriman
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