Wildfires Threaten Canadian Oil Sands Production
July 19, 2024
Energy prices were mixed in yesterday’s markets driven mainly by lower US equites markets and initial unemployment claims coming in much higher than expected. Jobless claims came in at 243,000, up 20,000 from last week, the estimate was for claims to be at 229,000. This report was favorable for the Fed and the thought that they will lower rates in September which should stimulate the economy and increase energy demand.
OPEC+ views the current oil market as tight with higher prices being driven by upgraded demand expectations and the extension of their own production cuts. OPEC+ has maintained its significant production cuts, which are the largest since the Great Financial Crisis of 2008. The market tightness is considered artificial due to these cuts, and OPEC+ is in control of how long this rally will continue. The price preference for OPEC+ appears to have shifted upwards, with the current price range being the lowest acceptable. But crude oil prices can potentially go well into the $90 or even low triple digits before OPEC+ might consider easing cuts.
New of wildfires in Canada that could threaten about 500,000 bpd of supply are being watched by energy traders. This potential disruption has pushed the WTI prompt spreads to almost nine-month highs.
Two oil tankers near Singapore are on fire today after colliding overnight. Navigation in the area is said to be unaffected, but crews have been dispatched to ensure the crews are safe and assist if there was an oil spill.