Oil prices jump on Canada, Nigeria outages

Oil prices have risen as the wildfire in Canada shut in more than 1 million barrels per day of production from Alberta's oil sands region.
Oil prices have risen as the wildfire in Canada shut in more than 1 million barrels per day of production from Alberta's oil sands region.PHOTO: BLOOMBERG

NEW YORK (REUTERS) - Brent jumped more than 4 per cent on Tuesday (May 10) while US crude settled up more than 2 per cent, after a late burst of buying driven in part by expectations that record US crude inventories would not swell by as much as they have in recent weeks.

Crude supply outages in Canada, Nigeria and elsewhere boosted prices. Brent's gain was its biggest one-day percentage move in a month.

The American Petroleum Institute (API) was due to report preliminary stockpiles data at 4:30 pm (2130 GMT) ahead of official numbers from the US government on Wednesday.

Analysts polled by Reuters expect a 714,000-barrel stockpile build last week to record highs above 543 million. That would be one of the smallest builds in weeks. As recently as mid-April, US crude inventories rose more than 6 million barrels in a week. "The talk is that API will show a big draw in Cushing and not a build," said a crude futures broker.

Market intelligence firm Genscape estimated on Monday that Cushing, the storage hub and delivery point for U.S. crude futures in Oklahoma, saw a stockpile build of 1.4 million barrels during the week to May 6.

Oil prices have risen as the wildfire in Canada shut in more than 1 million barrels per day of production from Alberta's oil sands region. Royal Dutch Shell resumed production in the area on Tuesday and others looked to restart as repair crews assessed damage.

In Nigeria, attacks on oil infrastructure have pushed crude output close to a 22-year low in Africa's largest oil producer, Reuters data showed.

Brent spiked just before settlement and settled up US$1.89, or 4.3 per cent, at US$45.52 per barrel. More than 6,000 contracts changed hands in the final minute, Reuters data showed. On Monday, Brent fell 3.8 per cent.

US crude's West Texas Intermediate (WTI) futures rose US$1.22, or 2.8 per cent, to settle at US$44.66.

Refined oil products joined the rally, with gasoline gaining 3 per cent and ultralow sulfur diesel, or heating oil, 4 per cent.

This year's rebound in oil has been one of the strongest since the financial crisis. Prices have rallied nearly 80 per cent from multiyear lows under US$30 in the first quarter, supported by falling US production, supply constraints in Libya and the Americas and a weak US dollar.

Since the end of April, the rally has stalled at around US$45.

The US government's forecast of higher oil demand for this year also supported prices, traders said, although the rally would probably prevent production from falling as sharply as predicted.