ANZAC, Alberta (REUTERS) - A massive wildfire that has forced the evacuation of all 88,000 residents of the western Canadian city of Fort McMurray and burned down 1,600 structures has the potential to destroy much of the town, authorities said on Wednesday.

Fort McMurray had been largely emptied of its residents by Wednesday afternoon, officials said, despite fuel shortages, snarled traffic and a highway closed by the flames in the northeastern part of the province of Alberta, the heart of Canada's oil sands region.

So far there are no reports of fatalities, but crews had been unable to stop the wildfire, which has charred 7,500 hectares since it erupted on Sunday.

Hot, dry winds forecast for later on Wednesday threatened to complicate matters.

"It is a possibility that we may lose a large portion of the town," said Scott Long, an official with Alberta's emergency management agency.

Major oil sands facilities were not in the fire's path, but some companies' operations were disrupted by efforts to help employees and evacuees. Images from the neighborhood of Beacon Hill in the city's south-east showed rows of charred house foundations, their upper stories burned to the ground, and blankets of white ash within.

Officials said 80 per cent of houses in the neighbourhood, nearly 600 in total, were destroyed. The regional government said two other neighbourhoods, Abasand and Waterways, had sustained "serious loss."

Alberta Premier Rachel Notley said a total of about 1,600 structures have been destroyed in Fort McMurray.

"There are certainly areas within the city that have not been burned, but this fire will look for them and it will find them and it will want to take them. And our challenge today is to prevent," said chief Darby Allen of the Fort McMurray fire department.

Canadian Prime Minister Justin Trudeau said the military can deploy air force planes to the stricken city as needed. Fort McMurray International Airport said it was suspending all commercial flights in and out of the city on Wednesday.

Queen Elizabeth, Canada's head of state, said in a message that she and her husband Prince Philip were "shocked and saddened" by news of the fires.

"Our thoughts and prayers are with all those who have been affected," she said.

'EXPLOSIVE CONDITIONS'

It was the second major fire in the oil sands region in a year. Last May, wildfires led to the evacuation of hundreds of workers from the region, and a 9 per cent cut in Alberta's oil sands output.

Royal Dutch Shell said one of its oil sands mines was closed and another was in the process of being shut down.

Suncor Energy, whose oil sands operations are closest to the city, said it was reducing crude production.

Oil prices briefly rose on concerns about reduced output from the Canadian oil sands before paring gains on Wednesday.

Strong winds, high temperatures and low humidity will again create "explosive conditions" on Wednesday, said Bernie Schmitte, forestry manager in the nearby municipality of Wood Buffalo.

Schmitte added that more resources are being assembled across Canada.

"The fire has resisted all suppression efforts," Schmitte said.

The Canadian Red Cross said evacuees were calling the organisation for help getting food and water.

A highway closure on Tuesday forced most evacuees to drive north, away from major cities.

By Wednesday morning, the highway had reopened, but fuel had run out, stranding evacuees seeking to drive out of Fort McMurray.

Alberta's transportation department said it was escorting a fuel tanker north to help stranded drivers..

The fire drew immediate comparisons to one that hit Slave Lake, Alberta in 2011, forcing 7,000 to evacuate and destroying more than 300 buildings.

Insured damage was more than C$700 million, making Slave Lake one of the most expensive insured disasters in the country's history.

But Fort McMurray is a much larger settlement than Slave Lake, with some 125,000 people in the region.

Wildfires were also raging in neighbouring British Columbia on Wednesday, including a massive 9,000 hectare blaze in the province's north-east that was threatening to spread across the border to Alberta, the B.C. Wildfire Service said.

Because of the local threat, British Columbia declined to send firefighters to Alberta, though the agency said it had sent equipment like pumps and hoses.