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Crude prices up as Canada's blaze grows

Monday, May 09, 2016 - 01:41

Oil prices have jumped again as a huge wildfire in Canada's oil sand region knocked out over a million barrels in daily production capacity. As Hayley Platt reports, a government reshuffle in Saudi Arabia is also being closely watched.

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Canada's worst wildfires in recent memory have devastated the region. And the country's oil industry. Alberta is the heart of Canada's oil sands operations. And many of the big producers have had to halt production - knocking a third of Canada's output off-line. Three major firms have warned they may not be able to deliver on some contracts, sending oil prices up on both sides of the Atlantic. And that trend could continue. (SOUNDBITE) (English) LONDON CAPITAL GROUP, MARKET ANALYST, BRENDA KELLY, SAYING: "As you can see oil prices have recouped a lot of their losses over the past number of weeks. Some of it is down to a weaker dollar in the face of many not expecting to see any interest rate hike from the Federal Reserve in the very near times so that is helping but ultimately it's going to be all about demand and we are heading into the summer driving season and that is notably generally quite positive for oil prices." Oil also got a boost from the world's biggest exporter. The Oil minister in Saudi Arabia was replaced in a government shake-up over the weekend. And Khalid al-Falih will have a much bigger remit, covering energy, industry and mineral resources. (SOUNDBITE) (English) LONDON CAPITAL GROUP, MARKET ANALYST, BRENDA KELLY, SAYING: "I think OPEC have lost a lot of their power over the actual cost of oil and certainly his predecessor has failed to really kind of cut into production in a bid to keep market share but certainly there is always that possibility but it will need to have contributions from all OPEC member states if it is actually to go ahead." That maybe more difficult to achieve than it sounds. Saudi Arabia says it won't cut unless Iran does. And that's not looking likely - Tehran won't consider a reduction until its output is back to pre-sanction levels.

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Crude prices up as Canada's blaze grows

Monday, May 09, 2016 - 01:41