(MENAFN- The Arabian Post)

Oil prices rose as investors reacted to the prospect of a resolution to the US government shutdown, bolstered by optimism that a deal could bring an end to the ongoing stalemate. The increase in oil prices follows two consecutive weeks of declines, as market participants await key data that could provide more clarity on global supply and demand dynamics.

Brent crude surpassed $64 per barrel, while West Texas Intermediate hovered around $60, reflecting a modest rebound. The positive sentiment stems from growing expectations that a resolution to the shutdown could be imminent, which would alleviate concerns over its potential economic impact. The shutdown, now in its fourth week, had caused significant disruption in government operations and had led to uncertainty in financial markets, affecting commodities like oil.

The rise in oil prices is also being attributed to broader market movements, where equities and commodities gained following positive news on the shutdown front. If the shutdown ends, it would be viewed as a relief for the global economy, particularly in sectors like energy, where government policy plays a critical role. However, traders are also keeping a close eye on a data-heavy week ahead, as key reports are expected to provide further insights into global oil supply conditions, which could influence price trajectories.

Oil market participants are particularly interested in any signs of a global glut, which has been a concern over the past few months as production has remained elevated, especially from major producers like the US and Saudi Arabia. While demand from key consuming regions has shown resilience, there are growing concerns that an oversupply could begin to weigh on prices.

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A major factor influencing the market this week is the US Energy Information Administration's weekly petroleum report, expected to offer an updated picture of US crude stockpiles. Analysts are closely monitoring these figures to gauge whether the US production surge continues to outpace demand growth. If stockpiles continue to build, it could signal an oversupply in the market, potentially putting downward pressure on prices.

The market is awaiting a series of global reports that will provide clarity on production levels from key players within OPEC and non-OPEC countries. Analysts expect to hear updates on the cartel's compliance with production cuts, which have been in place to help balance the market after years of oversupply. The ongoing commitment to these cuts, combined with a relatively stable global economic outlook, could offer support for oil prices if the supply-demand balance remains tight.

Meanwhile, concerns surrounding geopolitical risks in oil-producing regions are also weighing on traders' minds. Tensions in the Middle East, particularly between the US and Iran, could have a significant impact on supply lines. Despite these concerns, the market remains largely focused on the potential economic implications of the US government shutdown, which has dominated the narrative over the past few weeks.

The shutdown has disrupted the release of crucial government data, including economic growth figures and employment reports, which would normally offer traders a clearer picture of the overall health of the US economy. The delay in these reports has heightened uncertainty, especially regarding energy demand in the world's largest economy.

Despite the uncertainty, optimism that the shutdown may soon be resolved has provided a much-needed boost to sentiment in the markets. As investors regain confidence, commodity prices, including oil, have followed the upward trajectory seen in broader stock markets.

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