The worst wildfire in Alberta history is boosting Canadian crude prices as oil companies cut output in fourth-biggest producing nation in the world.
Western Canadian Select, the benchmark price for oil sands production, strengthened to a $12.85-a-barrel discount to U.S. West Texas Intermediate on Wednesday, the smallest difference in two months.
Suncor Energy Inc., Royal Dutch Shell Plc, Cnooc Ltd.’s Nexen and Husky Energy Inc. are among companies that shut plants or reduced production. More than 1 million barrels a day of oil sands production capacity may be affected by the blaze, according to company statements and data published in Alberta’s Spring Oil Sands Quarterly. The shutdowns follow supply disruptions in places like Nigeria and Iraq earlier this year that have helped crude prices rebound from a 12-year low.
“Canadian crude prices strengthened relative to WTI as news of supply curtailment started coming to light,” Morgan Stanley energy analyst Benny Wong said in an e-mailed note. The bank estimates 400,000 barrels a day to 550,000 barrels a day of production are currently offline. Read more