Canada’s wildfires, which have knocked out some 1.5 million barrels of daily oil production, are expected to drive up tanker imports and freight rates as US consumers seek alternative supplies after a drop in Canadian pipeline supplies.
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Data released by the U.S. Energy Information Administration (EIA) showed crude inventories fell 3.4 million barrels last week, compared with analysts’ expectations for an increase of 714,000 barrels.
But analysts noted that speculators already hold the largest number of long positions since last summer in U.S. crude’s West Texas Intermediate futures CLc1 and near-record bullish bets on Brent LCOc1, and said the scope for further gains was limited.
“I think we are still in bull market, but I also think the headwinds are increasing”, Scott Shelton, energy broker with ICAP in Durham, North Carolina, said, referring to the heightened volatility in crude futures since April’s rally of 20 per cent or more. The EIA trimmed its 2017 oil demand forecast by 0.2 percent to 19.66 million bpd.
Energy stockpiles typically recede at this time of the year as refineries complete seasonal maintenance and process oil into refined products, like gasoline.
The prices of crude oil across the world is taking a nose dive again, falling from 2016 highs to the mid-forties on Monday.
Brent crude oil futures were up 27 cents at $45.79 per barrel.
USA crude’s West Texas Intermediate (WTI) futures CLc1 rose $1, or 2.2 per cent, to $44.44.
The latest developments in Nigeria reversed a slight fall in prices earlier in the day after oil sands production in Canada restarted after forced closures due to the wildfires.
The SPDR Gold Shares (GLD) and the Market Vectors Gold Miners ETF (GDX) were both higher in recent trading, along with the United States Oil Fund (USO).
Anglo-Dutch oil giant Shell’s Nigerian subsidiary today said it has declared force majeure on Bonny Light crude exports following a leak in a key pipeline.
Canadian officials got their first glimpse of the oil sands town of Fort McMurray since a wildfire erupted and knocked out vast amounts of crude production there, and they said nearly 90 percent of its buildings were saved. With that being the case, the market is very likely going to continue to see bullish pressure in the oil market, even though there is a significant amount of resistance above. All juicy news for oil buffs looking for signs of a rebound.
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The EIA reported a decrease of 3.41 million barrels in the U.S. inventories during the week ended May 6 in its weekly crude oil report released at 10:30 AM EDT today.
