CALGARY, Alberta (Reuters) - Western Canadian crude stocks dropped by almost 1 million barrels last week and could decrease further due to massive wildfires in northern Alberta that shut down nearly half of oil sands output, energy intelligence firm Genscape said on Friday.
Companies including Suncor Energy and Imperial Oil shut in more than a million barrels a day of production as a precaution against an uncontrolled blaze that forced all 88,000 residents of nearby Fort McMurray to flee the town 10 days ago.
Data from the week ending May 6 showed crude inventories monitored by Genscape in Edmonton and Hardisty, Alberta, and Kerrobert, Saskatchewan, fell to 25.6 million barrels, down 4 percent from the previous week and 10 percent from record levels a month earlier.
The vast majority of projects affected by the wildfire are still offline or in the process of restarting operations, and many industry players expect to see another draw next week.
Genscape analyst Dylan White said the inventory draws were likely to be short-term as production returns, but there were many variables at play.
Since last Friday’s data companies such as Statoil ASA and Husky Energy have announced complete shutdowns at some oil sands projects, while Shell Canada said production had resumed at very reduced rates at its Albian Sands mine site.
“Stocks could decrease in the next month due to seasonal trends and normal fluctuation, but long-term draws are not expected as a result of the recent wildfires,” White said.
Traders in Calgary said the draw on storage inventories had helped dampen moves in price differentials, which strengthened during the wildfire outages but have not moved as dramatically as they did during smaller wildfire production cuts last year.
Light synthetic crude from the oil sands for June delivery last traded at $1.10 per barrel above the West Texas Intermediate benchmark, according to Shorcan Energy brokers, up from 95 cents a barrel over the benchmark on Thursday.
Western Canada Select heavy blend crude for June delivery tightened to $11.90 per barrel below WTI, having settled at $12.30 per barrel below the benchmark the previous day.
Editing by David Gregorio