Oil prices were up on Monday, buoyed by hopes the U.S. government shutdown could end soon, per Reuters, boosting demand in the world’s top oil-consuming nation. Brent crude added 0.82% to $64.15 a barrel, while West Texas Intermediate climbed close to 1% to $60.31. This recovery helped stabilize sentiment after two back-to-back weeks of losses that were driven by oversupply fears.

USO ETF has suffered sharp volatility this year. Track its live prices.

ETF Reaction: Energy Funds Staging A Comeback

The rebound in crude is reflected in oil-focused ETFs. The United States Oil Fund (NYSE:USO), which tracks near-month WTI futures, saw a pickup in trading volumes as investors bet on higher short-term prices. Meanwhile, the ProShares Ultra Bloomberg Crude Oil (NYSE:UCO), a leveraged ETF that amplifies daily oil price movements, drew speculative interest from traders seeking to ride the rebound.

Broader energy-sector plays also crawled up. The Energy Select Sector SPDR Fund (NYSE:XLE), which includes U.S. oil majors ExxonMobil Corp (NYSE:XOM) and Chevron Corp (NYSE:CVX), ticked higher as the brighter outlook for demand recovery buoyed optimism over corporate earnings.

On the upstream side, the SPDR S&P Oil & Gas Exploration & Production ETF (NYSE:XOP) and the VanEck Oil Services ETF (NYSE:OIH) both gained more than 1% on the improved sentiment for producers and service companies, especially as disruptions to Russian supply stand to tighten global refined product markets further.

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Rebounding Oil Sentiment

Progress in the U.S. Senate toward reopening the government restored some appetite for risk across markets. The Reuters report cited analysts saying that a resolution could stabilize air travel and energy logistics— two sectors hit hard during the shutdown. Traders also expect pent-up fuel demand to surface as federal agencies resume normal operations, a trend that could lend short-term support to crude-linked ETFs.

Geopolitical Tailwinds

In the meantime, the ongoing rise in disruptions in Russia is giving oil markets extra support: drone attacks forced a shutdown of the Black Sea refinery Tuapse, and sanctions are still complicating exports from Lukoil. These events, along with OPEC+’s cautious stance on output increases, also help address concerns about rising inventories worldwide.

Investor Takeaway

For investors in ETFs, this is a conflicted setup–part optimism, part caution. Geopolitical supply risks and U.S. policy relief could sustain near-term gains for the USO, UCO, and XLE funds. Still, the persistent build-up in crude inventories and rising floating storage in Asia indicate that volatility is far from over.

For now, energy ETFs are regaining attention as tactical plays in a market testing both supply limits and investor patience.

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