Americas News
Worsening Canadian Wildfire Causes More Shutdowns and Price Hike
Canadian wildfires, the worst of which were thought to be over last week, are now directly aimed at oil facilities in Fort McMurray.
The news helped propel the per barrel price of Brent Tuesday to $49.28, and WTI to $48.31.
Ship & Bunker's global average price indices for IFO380 all rose $2.50 per metric tonne (pmt) Tuesday, and all sit at, or near, 6 month highs.
The price escalation was also triggered by militant attacks on oil installations in Nigeria's Niger Delta region, and this caused Carsten Fritsch, analyst at Commerzbank, to predict that crude will soon reach $50 per barrel: "The outages in Canada and Nigeria alone are probably enough to leave the global oil market undersupplied at present."
The fires, civil unrest, and other production slowdowns plaguing other countries have similarly caused Goldman Sachs to contradict its earlier prediction of $20 oil and forecast crude at averaging $50 per barrel in the second half of 2016.
Meanwhile at Fort McMurray, Syncrude and Suncor are scrambling to protect their assets. A spokesperson for the former said that it has "about 100 employees remaining at our two sites to maintain the safety and stability of our operations, such as key utilities, until conditions allow for additional workers to safely return," but all other staff have been evacuated.
Similar actions taken by Suncor mean that about 8,000 workers have been evacuated between the two companies; in addition, the fires have caused significant damage to a camp run by Horizon North Logistics.
To date, the Alberta wildfire, which is reported to have grown to 355,000 hectares in size and is traveling at a rate of about 40 metres per minute, has resulted in a cumulative production loss of 1.2 million barrels per day for two weeks.
Earlier this week, Capital Economics stated that the price rally caused by fears over supply outages "may have gone too far... production in Canada is likely to be fully restored by next month, bringing more than one million barrels per day of supply back to the market."
But with today's news from Canada, that view may already be outdated.
Add in Nigeria, and the ongoing concern over a serious collapse of Venezuela, and any bearish concerns over increased production from Iran and Saudi Arabia are clearly being overshadowed, and it is perhaps understandable that there has been so little chatter about renewed oil freeze efforts in the run up to the June 2 meeting of the Organization of the Petroleum Exporting Countries (OPEC).
