The oil market climbed Tuesday, rebounding from the previous day’s heavy losses that were triggered by receding concerns over wildfires in Canada’s crude-producing Alberta region.
Around 1700 GMT, US benchmark West Texas Intermediate for delivery in June rallied 87 cents to $44.31 a barrel. Brent North Sea crude for July added $1.43 to $45.06 a barrel compared with Monday’s close.
“Canadian wildfires have been subsiding but the associated downdraft in oil prices appears to have moderated, helped by the possible supply impact of an outage in Nigeria,” said Jasper Lawler, analyst at CMC Markets. Canadian authorities were focusing on restoring output after the fires that have raged for a week forced oil companies in the area to shut down operations, slashing production by one million barrels a day.
Prices had slumped Monday, with Brent shedding 3.8 percent of its value, also as dealers bet that new Saudi oil minister Khaled al-Falih could spark greater production from the OPEC heavyweight. Over the weekend, Saudi Arabia unexpectedly replaced veteran oil minister Ali al-Naimi with the close ally of Deputy Crown Prince Mohammed bin Salman.
“Saudi Arabia has stated that an oil freeze deal could only materialise if Iran partakes too, but with Iran on an ongoing quest to reclaim lost market share, expectations of a successful deal have been heavily diminished,” said analyst Lukman Otunuga at traders FXTM. The changing of the guard came ahead of a meeting next month of the Organization of the Petroleum Exporting Countries and followed a failure last month by major producers to agree on freezing output despite a global supply glut.
State oil giant Saudi Aramco, which could soon become the world’s largest listed company, will keep expanding despite low crude prices, its president said Tuesday. “Saudi Aramco will continue to expand,” Amin al-Nasser told reporters during a tour of the company’s headquarters on Saudi Arabia’s Gulf Coast in Dhahran, where it drilled its first test well in 1935. Even though the current situation “is challenging, it is an excellent opportunity for growth,” said Nasser, as the oil industry worldwide reels from the recent collapse in oil prices.
Data published Tuesday meanwhile revealed that Nigeria’s oil output has slumped to a 22-year low because of pipeline sabotage and increasing unrest that has seen major companies evacuate staff. Data compiled by Bloomberg indicated that output in Africa’s biggest oil producer has fallen below 1.7 million barrels per day (bpd) for the first time since 1994. Rebels seeking a fairer share of revenue for locals in the oil-rich southern delta are increasingly targeting facilities, posing a fresh security challenge for President Muhammadu Buhari.