Oil futures rallied up to 2 percent on the day, as wildfires in Canada disrupted oil output from the country. Plus, Saudi Arabia replaced long-term oil minister Ali al-Naimi on Saturday, potentially signaling a pullback on its strategy of maintaining high production.
Prices have been boosted by reports that more than production in Canada may be off by more than one million barrels per day as a result of the fires in the oil sands region. Given the nature of the fires, there is no way of knowing when production will return to previous levels which could continue to support prices for now.
The gains could have perhaps been larger had it not been for the replacement of Saudi Oil Minister, Ali al-Naimi, with Khalid al-Falih who is expected to continue to pursue the policy of maintaining market share and forcing out higher cost shale producers. A production freeze or cut now looks extremely unlikely at the OPEC meeting in June or at any point for that matter, in the foreseeable future.
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