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Canadian oil prices jump as traders brace for supply constraint

Fort McMurray wildfire forces closure of some oil sands facilities, ups Canadian oil prices

Canadian oil prices

Canadian oil prices climbed during trading on Monday as uncertainty over when oil sands facilities that were forced to halt production due to an out-of-control wildfire will re-open.  Photographer: Darryl Dyck/Bloomberg.

NEW YORK, May 9 (Reuters) – Canadian oil prices climbed further on Monday as a raging wildfire in northern Alberta entered a second week and traders braced for possible supply constraints as the blaze had spurred some producers to shut facilities as a precaution.

Canadian prices rallied during the latter half of last week as a number of producers, including Suncor Energy Inc and Shell, took some 1 million barrels a day of capacity offline as a precaution due to the fast-spreading fire. That’s about half the total output from Canada’s oil sands.

Officials said on Sunday they were more optimistic about handling Canada’s most destructive wildfire in recent memory. However, it still wasn’t known when energy companies would be able to restart operations at affected sites or when Fort McMurray’s 88,000 evacuated residents could return.

oil prices

The Canadian Red Cross is supporting the people of Fort McMurray forced from their homes by wildfire. Please click here to donate.

Western Canadian Select (WCS) heavy blend crude for June delivery traded as strongly as $11.00 a barrel under the West Texas Intermediate benchmark, according to Shorcan Energy Brokers.

That’s the narrowest discount since June 2015, though it last traded slightly weaker at a $11.35/bbl discount to U.S. crude. It settled at a $11.95-a-barrel discount on Friday.

Light synthetic crude from the oil sands for June traded at as high as a $3.00 a barrel premium to U.S. crude, although it last traded at a $2.65 a barrel premium. It settled at a $2.45 a barrel premium on Friday.

(Reporting By Catherine Ngai; Editing by Bernadette Baum)

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