As Oil Markets Tighten, Geopolitical Events Matter Again
Oil prices jumped on Thursday as surprise outages came from Canada and Libya, reversing several days of losses. WTI and Brent surged by more than 4 percent in early trading on May 5.
The hellish wildfires sweeping swathes of Alberta near Fort McMurray forced the evacuation of tens of thousands of people. Alberta’s boreal forests are suffering through a bout of unusually warm and dry weather, and the tinderbox ignited and is quickly spreading. Wildfire officials in Alberta say that the fire could continue to grow, probably to about 100 square kilometers, and last at least until the weekend.
The fires forced several oil sands companies to ratchet down operations as employees and their families fled the region. Suncor Energy said that it “conducted an orderly shutdown of its base plant operations” near Fort McMurray, affecting 350,000 barrels per day of production. And because of the shortage of diluent in the region, Suncor said that its “in situ facility operations are running at reduced rates,” and “Syncrude facilities are also operating at reduced rates.”
Royal Dutch Shell also announced that it had shut down its Albian Sands mining operations. “While our operations are currently far from the fires, we have shut down production at our Shell Albian Sands mining operations so we can focus on getting families out of the region,” a spokesperson said. Shell produces 250,000 barrels of oil per day from its facilities and provided no timeline for when it expects to be back online.
Husky Energy said that it reduced production at its Sunrise oil sands project by two-thirds, ramping down to 10,000 barrels per day.
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