Meanwhile, wildfires in Alberta, Canada have halted an estimated 1 million barrels of daily production, or the equivalent to a third of the country’s capacity, the Financial Times reports.
“Alberta is the third largest oil reserve globally and largest source in Canada,” Tim Pickering, Founder and CIO of Auspice Capital, which also offers the Canadian Crude Oil ETF (CCX.TO), told ETF Trends. “Canada is the largest foreign supply to the U.S.”
The supply disruption helped explain why July Brent crude was briefly trading at a discount to July WTI futures Monday. The supply concerns bolstered WTI crude and Canadian oil, with the Western Canada Select, a marker for Alberta’s heavy sour oil, narrowing to a discount of $11 per barrel to WTI.
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If the extent of the fire damage is severe enough to keep Alberta’s production offline, the supply disruption could put a dent to the global crude oil glut. Last year when fires occurred – it was no where near as significant as the current damage, about 500,000 barrels per day were knocked offline, which helped WTI rally $20.
“Right now it is estimated 1 million barrels per day is offline from the region,” Pickering added. “Given the storage in the province is max 35 million barrels, it won’t last long. With the global supply-demand imbalance estimated at 1.5 million to 2 million barrels per day, this could change a lot if it persists.”
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United States Oil Fund