Baku, Azerbaijan, May 10
By Aygun Badalova - Trend:
The wildfire in Canada is yet to directly affect oil production, analysts of the US JP Morgan bank said in weekly Oil Market report, obtained by Trend.
"However, with precautionary shut-ins already totalling around 1 million barrels per day and unconfirmed reports that the Enbridge pipeline out of the region is closed, the outage could become more pronounced. Moreover, the broader question of how quickly the region can recover may pose staffing issues for operators in the coming weeks and how easily normal operations can be resumed," the analysts said.
Wildfires in Canada's oil-rich Alberta province have knocked off some 1.6 million barrels a day according to consultancy Energy Aspects. Several companies including Suncor, BP, and Phillips 66 have declared force majeure on Canadian crude, the Wall Street Journal reported.
Oil prices gained on Tuesday, with supply outages from Canada to Nigeria helping to alleviate the global glut of crude. Brent crude rose 1.4 percent to $44.26 a barrel on London's ICE Futures exchange. On the New York Mercantile Exchange, WTI futures were trading up 0.8 percent at $43.80 a barrel.
If the production outage continues for a prolonged duration, US crude inventories will need to draw down, analysts believe.
"The current WTI spread of $0.65 per barrel on the front-month will likely strengthen and outright WTI prices may also lift temporarily to above $50 per barrel. However, the main beneficiary from such a development would be the regional crude spreads," they said.
According to the analysts' forecasts, WTI average price will amount to $40.41 per barrel in 2016 and $52 per barrel in 2017.
Brent prices is forecasted to average $41.05 per barrel in 2016 and $52 per barrel in 2017.