Brent crude futures rose 36 cents at $45.37 a barrel on Friday as the inferno at a stretch of forested wilderness with the third-largest reserves of oil in the world continued to burn out of control.
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Three major oil firms have warned they will not be able to deliver on some contracts for Canadian crude, a further sign that output cuts due to wildfires are curbing supplies from the Alberta oil sands region.
This in turn weighed down oil prices.
While US commercial crude oil inventories rose in the same week, investors focused more on hopes the production decline would help ease the global supply glut.
The companies acted after a fire this week forced the evacuation of 88,000 people from Fort McMurray, located in the heartland of Alberta’s energy region, and resulted in the shutdown of about one million barrels per day in production, almost half of Canada’s oil sands output. Adding to the production outage in Canada is an ongoing decline in US output.
Around 1020 GMT, US benchmark West Texas Intermediate for delivery in June was down 24 cents at $44.08 a barrel compared with Thursday’s close.
Traders said that a broad sell-off in China’s commodities market, which turned a recent rally into a slide, was also weighing on oil during Asian trading hours.
“Unplanned oil supply disruptions have been a key element so far this year that have contributed to a tighter oil market than was otherwise expected”, said analyst Guy Baber of Simmons & Co. Here’s how things look in the markets right now:Investing.comInvesting.comOil’s charge on the day is being led by data from the US Energy Information Administration (EIA) released on Wednesday that showed oil production in the country has fallen to its lowest level since September 2014.
Analysts said the hits to North American output, combined with disruptions in Latin America, were contributing to a fast erosion of global oversupply that peaked as high as 2 million bpd past year.
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The United States last week imported 110,000 barrels of oil per day more than it did the previous week and the four-week average for imports is 8.4 percent higher than a year ago.
