A huge wildfire near Canada’s oil sands region and escalating tensions in Libya stoked concern among investors over a near-term supply shortage, driving crude prices up for the first time in a week on Thursday.
Brent futures were up 78 cents US, or 2.2 per cent, at US$45.40 a barrel by 12:49 p.m. EDT (1649 GMT).
U.S. crude’s West Texas Intermediate (WTI) futures gained US$1.04, or 2.4 per cent, to US$44.81.
Western Canada Select heavy blend crude for June delivery at one point traded at US$11.50 a barrel under the West Texas Intermediate benchmark, according to Shorcan Energy brokers.
That was the narrowest discount since late February and significantly tighter than Wednesday’s settlement of US$12.70 a barrel under U.S crude. WCS was last at US$12.15 a barrel under U.S. crude.
The market is becoming much more sensitive to supply disruptions
“The difference today compared with a year ago is the market is starting to price in supply disruptions, whereas in a market that is totally oversupplied, you don’t care about losing half a million barrels a day (in production),” Petromatrix strategist Olivier Jakob said.
“The market is becoming much more sensitive to supply disruptions.”
The wildfire has forced the evacuation of all 88,000 people in the western Canadian oil city of Fort McMurray and burned down 1,600 structures, and has the potential to destroy much of the town, authorities said.