Oil prices hit fresh highs as Canada wildfires rage on

 18 May 2016 - 10:20

Oil prices hit fresh highs as Canada wildfires rage on
This file photo taken on May 7, 2016 shows flames and smoke rising off Highway 63 outside Fort McMurray, Canada. AFP / Cole Burston

 

Singapore: Crude prices hit fresh 2016 highs in its march toward $50 in Asia Wednesday, fanned by escalating wildfires in Canada's oil sands region and hopes of an easing in a global supply glut.

Prices shot up this week after US banking giant Goldman Sachs said supply disruptions in Africa's biggest oil producer Nigeria -- along with better demand -- had created a surprising short-term deficit.

It described the situation in Nigeria as "systemic" and production in that country is likely to remain curtailed for the rest of the year.

At about 0700 GMT, US benchmark West Texas Intermediate (WTI) for June delivery rose eight cents, or 0.17 percent, to $48.39 a barrel. Brent for July delivery climbed five cents, or 0.10 percent to $49.33, around its highest levels since October.

IG Markets analyst Bernard Aw said traders are feeling "more bullish" following the Goldman Sachs report.

"Based on the report, the demand has started to outstrip supply. Sentiment is picking up quite a bit and perhaps prices may push above the $50 mark in the next couple of weeks, provided the dollar does not strengthen further," he told AFP.

"Traders think that the situation in Canada might persist longer than expected. If the wildfires damage infrastructure, this may delay production even longer," he added.

The blazes around the oil sands hub of Fort McMurray in Alberta, Canada, have escalated, with about 8,000 workers ordered evacuated overnight.

Some 100,000 residents and oil workers had already been evacuated from Fort McMurray and its surroundings two weeks ago.

According to the Conference Board of Canada, oil production was reduced by 1.2 million barrels per day on average.

In Nigeria, a major trade union on Tuesday vowed to defy a court injunction and press ahead with a national strike to protest against government rises in petrol prices.

This follows several arrests by troops after armed attacks on an offshore oil facility.

Traders are also waiting for the release later Wednesday of a report on US commercial crude inventories, a closely watched gauge for demand in the world's top oil consumer.

AFP