Epic Alberta Wildfire Threatens to Engulf Canadian Oil City; Asian Oil Prices Climb
by Reuters
Anzac, Alberta – A massive wildfire that has forced the evacuation of all 88,000 people from the western Canadian oil city of Fort McMurray, burned down 1,600 structures, and caused oil prices in Asia to climb, has the potential to destroy much of the town, authorities said on Wednesday.
On Thursday, oil prices climbed in Asia with Brent breaching $45 a barrel as the raging wildfires threatened to cut Canadian output and a decline in US crude production also boosted the commodity.
Authorities say wildfires are burning out of control in the Alberta oil sands region of Canada, which mines and ships heavy crude south to the US market, and oil companies have reduced operations to facilitate the evacuation of non-essential employees.
CHILLING INFERNO — The wildfire in Alberta, Canada, spreading closer to this inhabited part of Fort McMurray sends chills down the spines of residents who fear their city may soon be reduced to ashes. (Handout photo via Reuters)
News of the Canada fires came as official data showed that US oil output sank last week by more than 100,000 barrels a day to 8.83 million barrels per day, its lowest level since September 2014.
While US commercial crude oil inventories rose in the same week, investors focused more on hopes the production decline would help ease the global supply glut.
The province declared a state of emergency for what was shaping up to be Canada’s costliest natural disaster.
Prime Minister Justin Trudeau said the military can deploy air force planes to the stricken city as needed. Fort McMurray International Airport suspended all commercial flights.
WALLS OF FLAMES
With a few neighborhoods already in ruins, worsening fire conditions Wednesday pushed walls of flames towards thousands of more homes in the northeastern Alberta town, in the heart of Canada’s oil sands region.
Authorities said there had been no known casualties from the blaze itself, but fatalities were reported in at least one car crash among the evacuees. Thousands bunked down in arenas, hockey rinks and oil work camps, often short of fuel and food.
A huge cloud of black smoke was visible from well over 60 km (37 miles) away from the town. Traffic on the main road headed south had thinned to a trickle, however, after major jams on Tuesday when the evacuation order was given.
Stretches of the highway had been converted into make-shift campgrounds by people in cars, trucks and recreation vehicles, who were fleeing the inferno.
OIL PRICES
At around 02:40 GMT, US benchmark West Texas Intermediate for delivery in June was up 96 cents, or 2.19 percent, at $44.74 and Brent crude for July climbed 80 cents, or 1.79 percent, to $45.42 a barrel.
“I think the Canada wildfires are the main reason for the rise in oil prices today on top of the US production decline,” IG Markets analyst Bernard Aw told AFP.
“Oil companies there say the fires could affect more than one million barrels a day of capacity.”
BMI Research said it expects US shale oil production to continue to decline over the long term and this should help ease the market oversaturation.
(Source: MB.com.ph)