FSMNews

Crude oil prices rallied in European trade on Thursday, as a gigantic wildfire in Canada disrupted its oil sands production.

A huge wildfire has forced all 88,000 people to flee the western Canadian oil city of Fort McMurray and burned down 1,600 structures is now threatening its airport and communities well south of the town.

Some oil pipelines in the region were forced to shut as a precaution, while output at some facilities has been disrupted, but the volume of the decline of the decline was uncertain.

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On the New York Mercantile Exchange, crude oil for June delivery surged $1.42 or 3.24 percent, to trade at $45.20 per barrel, after reaching a daily high of $45.31.

In the previous session, West Texas Intermediate prices climbed 13 cents or 0.3 percent as market players digested the steepest one week production plunge in United States production in nearly a year and a more robust than expected build in domestic crude stockpiles last week.

Crude inventories climbed 2.8 million barrels in the week ended April 29 to 543.4 million barrels, which is a new record peak.

Meanwhile, United States production slumped by 113,000 barrels per day last week, affecting its sharpest weekly tumble since last July.

Domestic output in the United States has now dropped for 11 straight weeks, sliding to its lowest level since September 2014.

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United States oil prices are up nearly 50 percent since declining to 13 year lows at $26.05 in February, as a dip in United States shale production bolstered sentiment.

However, commodity analysts cautioned that market conditions are still weak because of an ongoing supply glut.

Internationally traded Brent crude on the ICE Futures Exchange in London for July delivery elevated $1.16 or 2.6 percent, to trade at $45.78 per barrel after sinking 35 cents or 0.78 percent a day earlier.

Brent was dragged higher by an intensifying fight in Libya. A Tripoli based oil official cautioned that the country’s oil production could slip by 120,000 barrels per day if the Benghazi based National Oil Corporation, set up by the rival eastern government, proceeds to block tankers loading for Tripoli from the eastern Marsa el-Hariga port.

Futures of Brent prices are up by roughly 45 percent since briefly diving below $30 per barrel in February, despite the failed talks at a Doha summit in April, which aimed to attain a production freeze among OPEC and Non-OPEC members.

The Organization of Petroleum Exporting Countries is slated to meet on June 2 in Vienna to discuss further for another freeze initiative.