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The
lost capacity is equivalent to well over a third of the
country's typical daily production, and almost all of Canada's
crude from oil sands is exported to the United States.
U.S. crude futuresrose 65 cents to $45.31 a barrel by 1118 GMT,
having risen earlier by as much as $1.28, while Brent crude
futures gained 40 cents to trade at $45.77 a barrel.
The fire, which broke out on May 1, has forced three major oil
firms to warn they will be unable to deliver on some contracts
for Canadian crude.
The impact of the production loss has been far more marked in
the U.S. crude market, where prices for West Texas Intermediate
oil for delivery in July are now above those for Brent.
Investors now hold near-record high bets on a rising oil price,
which analysts say might mean there is less scope for Brent to
rally after having gained 25 percent in a month. [CFTC/] [O/ICE]
"Positioning has been already very stretched in the oil market
... Some must have taken the opportunity to exit, so that’s one
angle that momentum is slowing down," Barclays Capital
commodities strategist Miswin Mahesh said.
"There is a slight fear that prices have recovered too quickly,
and we risk repeating the same price trajectory seen around Q2
2015, where the rally slowed down the market balancing process,"
he added.
Canadian officials on Sunday showed some optimism as favorable
weather helped fire fighters, driving the flames away from the
oil sands town Fort McMurray, but there was no timeline for a
restart of operations at evacuated sites.
"The market is close to balanced ... when we consider the large
amount of supply offline in Canada and elsewhere, which could
last for months," Morgan Stanley said.
U.S. shale oil output is in decline and production is also
falling in Latin America, Asia and Nigeria, eroding a 1-2
million barrels per day supply overhang that pulled down oil
prices by 70 percent between 2014 and early 2016.
Markets were also watching Saudi Arabia, the world's biggest oil
exporter, where a government shake-up over the weekend included
the appointment of Khalid al-Falih as head of the new Ministry
of Energy, Industry and Mineral Resources.
"Changes in Saudi Arabia oil leadership only underscore the
shift in strategy to one focused on market share over price,"
Morgan Stanley said.
(Additional reporting by Barani Krishnan in New York; Editing by
Dale Hudson and Susan Thomas)
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