Several companies including Suncor, BP, and Phillips 66 have declared force majeure on Canadian crude. The EIA also said that total domestic production fell by 23,000 barrels a day to 8.802 million barrels a day last week.
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Brent for July settlement was 4 cents higher at $47.64 a barrel on the London-based ICE Futures Europe exchange after rising 9.1 percent the previous two sessions.
Matt Smith of ClipperData pointed out that oil prices had already been climbing on supply disruptions due to wildfires in Canada’s oil-rich Alberta region and problems with rebels and leaks in a Shell pipeline in Nigeria, Africa’s biggest oil producer.
Macquarie said in a research note that with crude production in decline in the United States and outside the Organization of the Petroleum Exporting Countries, global oil markets could be on the path to rebalance by end 2016.
Despite the output reductions, Us crude and Brent are down 2.3 percent and 2.8 percent respectively since last week’s close due to concerns about more than ample USA inventories, which are expected to hit records even with the disruptions in Canada.
In another boost to prices, the EIA estimated that US crude production fell slightly last week to 8.8 million barrels a day, the lowest level since September 2014.
Canadian officials on Sunday showed some optimism as favourable weather helped fire fighters, driving the flames away from the oilsands town Fort McMurray, but there was no timeline for a restart of operations at evacuated sites. Supply is resuming. It’s weighing on crude oil prices this morning.
The US government’s forecast of higher oil demand for this year also supported prices, traders said, although the rally would probably prevent production from falling as sharply as predicted.
Prices had rallied earlier in the day, as the International Energy Agency forecast a sharp drop in the supply glut, and following a surprise fall in U.S. crude reserves.
The inventories fall just added to the push higher.
WTI, which usually trades at a discount to Brent, briefly flip to a 17 cent premium earlier in the session.
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West Texas Intermediate for June delivery lost as much as 64 cents to US$46.06 a barrel on the New York Mercantile Exchange and was at US$46.10 at 10:38 a.m.in Hong Kong.
