Oil prices dived on Monday as caution among investors offset a decline in daily production capacity due to Canada’s most destructive wildfire in recent memory.
The lost capacity—about a million barrels—is equivalent to well over a third of the country’s typical daily production and almost all of Canada’s crude from oil sands is exported to the United States, Reuters reported.
US crude futures were down 67 cents at $43.99 a barrel, up for a fourth day in a row, while Brent crude futures fell $1.03 to $44.34 a barrel. The fire, which broke out on May 1, has forced three major oil firms to warn they will be unable to deliver on some contracts for Canadian crude.
Investors now hold more bets on a rising oil price than any time. US shale oil output is in decline and production is also falling in Latin America, Asia and Nigeria, eroding a 1-2 million barrels per day supply overhang that pulled down oil prices by 70% between 2014 and early 2016. Markets were also watching Saudi Arabia, the world’s biggest oil exporter, where a government shakeup over the weekend included the appointment of Khalid al-Falih as head of the new Ministry of Energy, Industry and Mineral Resources.
“Changes in Saudi Arabia oil leadership only underscore the shift in strategy to one focused on market share over price,” Morgan Stanley said.
China’s imports of crude oil rose 7.6% in April from a year ago, customs data showed on Sunday, lifted by continued strong demand from domestic private refiners.
