Canada wildfires drive oil prices higher

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SINGAPORE: Oil prices climbed in Asia on Thursday with Brent breaching $45 a barrel following a fall in US production while raging wildfires threatened to cut Canadian output.

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Authorities say wildfires are burning out of control in the Alberta oil sands region of Canada, which mines and ships heavy crude to the US, and oil companies have reduced operations as non-essential employees are evacuated.

News of the Canada fires came as official data showed that US oil output sank last week by more than 100,000 barrels a day to 8.83 million, its lowest level since September 2014.

While US commercial crude oil inventories rose in the same week, investors focused more on hopes the production decline would help ease a global supply glut.

At about 7:40 a.m. local time, US benchmark West Texas Intermediate for delivery in June was up $1.19, or 2.72 percent, at $44.97 and Brent crude for July advanced 94 cents, or 2.11 percent, to $45.56.

“I think the Canada wildfires are the main reason for the rise in oil prices today on top of the US production decline,” IG Markets analyst Bernard Aw told Agence France-Presse.

“Oil companies there say the fires could affect more than one million barrels a day of capacity.”

The wildfires pressed in Thursday on the Canadian oil city of Fort McMurray after more than 80,000 people were forced to flee and authorities warned that the next 24 hours would be critical for the city’s survival.

BMI Research said it expects US shale oil production to continue to decline over the long term and this should help ease the saturated market.

AFP

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