Canadian outages from Fort McMurray wildfires add to global oil supply ‘cliffhanger’

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Oil prices have plunged 50 per cent over the past 18 months on supply glut, but the excess supply is slowly draining as major oil producers face a string of production outages and declines.

Wildfires in Fort McMurray have brought the global tally of lost crude oil production up to 3.5 million barrels per day, setting the stage for a supply “cliffhanger” in crude oil markets, according to analysts.

Canada’s one-million bpd decline comes amid a spate of outages in Nigeria, Libya and other places, amounting to just around 3.5 million bpd, according to RBC Capital Markets estimates, exceeding last year’s global production increase of 2.7 million bpd.

“With all these interruptions, markets will be under-supplied quicker and allow us to chew through global inventories a little bit ahead of schedule,” said Jon Morrison, Calgary-based analyst at CIBC Capital Markets.

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