By Colleen Howe
BEIJING (Reuters) – Oil prices rose on Tuesday as the balance between supply and demand looked set to tighten due to operational disruptions, stronger demand and voluntary production cuts.
US West Texas Intermediate crude futures rose 18 cents to $79.30 a barrel by 1224 GMT. futures rose 19 cents to reach $83.55 a barrel.
The market is monitoring wildfires in remote western Canada that could disrupt the country’s oil supply, Tony Sycamore, market analyst at IG, said in a note.
As Canada’s wildfire season begins, firefighters were working Monday to contain one blaze in British Columbia and two in Alberta, near the heart of the country’s oil sands industry. No operational disruptions were reported.
But Alex Hodes, an analyst at energy brokerage StoneX, said Canada’s 3.3 million barrels per day production capacity is “very likely to be affected.”
Oil prices rose around 1% in the previous trading session on improving demand from the US and China.
US motoring group AAA has forecast that Labor Day road trips for the May 25-27 long weekend will rise to the highest level since 2000, while Chinese data for the weekend shows consumer prices rising for the third month in a row.
The market also continued to react to bullish commentary from Iraqi Oil Minister Hayyan Abdul Ghani over the weekend, according to a note from ANZ analysts. Ghani said on Sunday that Iraq will honor voluntary production cuts by OPEC+, which also includes the Organization of the Petroleum Exporting Countries, Russia and other non-OPEC producers, at the upcoming meeting on June 1.
That was a reversal of his comments on Saturday that Iraq had made sufficient voluntary reductions and would not agree to new production cuts.
