Oil prices were up by over 2% this morning (May 9), as traders in Asia weighed up the impact of the wildfires causing so many problems in Canada’s biggest oil-producing province, as well as a change at the head of the energy ministry in Saudi Arabia.
Brent crude, which is used as the international benchmark for the oil market, rose as high as 2.5% to a high of $46.68 (£32.35) per barrel and Texas Intermediate, which is the marker for the US market, was up 2.9% at $45.94 (£31.83).
Fires raging throughout the province of Alberta have caused oil companies to stop production, which means that Canada’s daily output has been reduced to about a fifth of the norm for the country. Officials have also put out a warning that the blaze could continue to be fought ‘for months’.
Nomura has estimated that the country’s oil capacity has been reduced by approximately 700,000 to 800,000 barrels of oil each day. However, Nomura also commented:
“The ultimate impact from the Alberta wildfires remains unclear. Moreover, weather continues to pose a significant concern as forecasts calls for relatively high temperatures, low humidity, and high winds.”
Last week, wildfires were sparked in Alberta’s Fort McMurray, which is the oil sands capital of Canada. This led to the province’s residents having to leave the area, and companies including Royal Dutch Shell, which makes Shell Tellus S2 M 46, and Suncor Energy shutting down their operations in the area.