Market Insights > First Look

First Look - Wildfires threaten Canadian oil production

Oil is trading higher and heading for a fifth weekly gain (As of 8:20 AM)
- WTI prices are up more than $11 since the lowest price of June, with prices having continuously moved higher over the last several weeks
Wildfires threaten Canadian oil sands (BBG)
- Several fires have erupted near the Canadian town of Fort McMurray, which produces a significant amount of Canadian oil
- The fires are outside of the city but have forced Suncor to shut in 231 MBbl/d of production
- This year’s wildfire season has not been as damaging as last year’s, but fire conditions are expected to worsen over the coming days, potentially threatening more production in the region
  - A drop in oil sands output could lead to higher differential prices for WCS, the main grade of Canadian heavy crude

Natural gas prices traded mostly flat at $2.27 Friday morning amid a minor shift cooler in weather models for the Lower 48
- Freeport LNG remains offline for the sixth day as the facility still awaits power to be restored
- Gas inventory levels remain robust despite dry gas production hovering around 100 Bcf/d
The EIA reported a 65 Bcf build for the week ended July 5
- The injection came in higher than the median estimate of 58 Bcf
- Inventories for the US are now at a surplus of 343 Bcf to last year and a surplus of 561 Bcf to the five-year average
- AEGIS notes that the ample amount of gas inventory has contributed to one of the lowest traded prices for the August ’24 contract
- The AEGIS end-of-season storage number remains at 3.9 Tcf – a high level of storage entering winter