SINGAPORE: Oil traders moved cautiously in Asia on Tuesday after the previous day’s sharp losses as the threat of wildfires to Canada’s crude-producing Alberta region eased and a strong greenback dampened appetite.
Canadian authorities were focusing on restoring output after the fires that have raged for a week forced oil companies in the area to shut down operations, slashing production by one million barrels a day.
Alberta’s premier toured the most affected town of Fort Murray—gateway to the world’s third largest reserves—on Monday and said it was largely intact despite the damage from the wildfires which forced tens of thousands of residents to evacuate.
At about 7 a.m. local time, US benchmark West Texas Intermediate for delivery in June was up four cents, or 0.09 percent, at $43.48 and Brent crude climbed 27 cents, or 0.62 percent, at $43.90.
On Monday WTI dived 2.7 percent and Brent plunged 3.8 percent.
“A literal change in the way the wind is blowing in Canada’s oil sands region [is]alleviating concerns over production cuts due to the wildfire,” said Margaret Yang, an analyst with CMC Markets in Singapore.
“A stronger US dollar also played a role in suppressing commodities price,” she said in a note.
Oil is traded in dollars, meaning a stronger greenback makes it more expensive for holders of other units.
Traders were also watching developments after Saudi Arabia’s surprise replacement of veteran oil minister Ali al-Naimi with a close ally of Deputy Crown Prince Mohammed bin Salman.
Khaled al-Falih, the longtime head of state oil giant Saudi Aramco, was appointed in a major reshuffle in OPEC’s largest oil exporter, which is moving to transform the economy by reducing its dependence on crude.
The changing of the guard came ahead of a meeting next month of the Organization of the Petroleum Exporting Countries (OPEC) and followed a failure last month by major producers to agree on freezing output despite a global supply glut.