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Oil heads back toward US$50 as Canadian wildfires rage

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World crude prices hit fresh 2016 highs Tuesday, heading back toward US$50 a barrel in the process, as advancing wildfires in Canada triggered more evacuations from the country's oil sands region.

[LONDON] World crude prices hit fresh 2016 highs Tuesday, heading back toward US$50 a barrel in the process, as advancing wildfires in Canada triggered more evacuations from the country's oil sands region.

Brent oil reached US$49.58 a barrel - the highest point since early November.

US benchmark West Texas Intermediate (WTI) struck US$48.42, a peak last reached in mid-October.

Later around 1640 GMT, Brent North Sea for delivery in July stood at US$49.22, up 25 US cents compared with Monday's close.

WTI for delivery in June climbed 42 US cents at US$48.14 a barrel.

"A break above US$50 in the next few days is very possible," said BMI Research oil and gas analyst Peter Lee.

"In the second half of the year, oil is likely to hold between US$45 to US$50 a barrel," he told AFP.

Prices are winning support from supply disruptions caused by wildfires in major crude producer Canada, as well as owing to armed attacks against oil facilities in Nigeria.

Wildfires continued their devastating advance on Tuesday, leading authorities to order more evacuations in Canada's oil sands region surrounding the city of Fort McMurray.

Oil company workers had just started trickling back to an area to the north when the latest evacuation was ordered late Monday.

Canada's largest petroleum company, Suncor, was forced to shutter its oil operations almost immediately after getting them back up and running.

Meanwhile in Nigeria, Africa's biggest crude producer, troops have made several arrests following the attacks on an offshore oil facility as the government moved to avert a labour strike over petrol prices.

"People are looking for any signs possible to confirm that supply is decreasing so any news of unplanned outages gets the market particularly excited," Lee added.

Elsewhere, a report by US banking giant Goldman Sachs has predicted a short-term supply deficit owing also to production outages in Venezuela, which is deep in political crisis.

Oil prices have rebounded strongly since plunging to near 13-year lows under US$30 in February but are still well below peaks of more than US$100 a barrel reached in June 2014.

Some analysts however said the disruptions are temporary and noted that the market remains oversupplied.

"Admittedly, these disruptions are large enough that the rebalancing in the market expected in the second half of the year may already be happening," research firm Capital Economics said.

"However, prices could quickly drop back again once at least some of this supply comes back on stream. In the meantime, global stocks remain ample."

AFP