Oil prices rose early Wednesday as major wildfires threatened Canada’s tar sands and the market expected U.S. crude and gasoline inventories to decline later in the day.
Brent oil futures were up 34 cents, or 0.4%, at $82.71 a barrel. West Texas Intermediate (WTI) crude futures rose 38 cents, or 0.5 percent, to $78.39 a barrel at 0016 GMT.
A major wildfire is approaching Fort McMurray, the center of Canada’s oil sands industry with production of about 3.3 million barrels per day, or two-thirds of the country’s total production, and thousands of people in the suburbs were ordered to evacuate.
U.S. producer prices rose more than expected in April and, although the prospect of a rate cut has become less certain, Federal Reserve Chairman Jerome Powell said there remained little likely that the Fed will have to raise rates again.
U.S. consumer prices as well as data on U.S. crude oil and gasoline inventories are both due Wednesday. Market sources cited figures from the American Petroleum Institute on Tuesday, indicating that U.S. crude oil and gasoline inventories declined last week.
API figures show crude inventories fell by 3.104 million barrels in the week ended May 10, the sources said on condition of anonymity. Gasoline inventories fell by 1.269 million barrels and distillates increased by 673,000 barrels.
“The lack of progress in reducing inflation continues to dampen expectations for a short-term rate cut,” ANZ Research said in a note. “Expectations of a further reduction in US oil inventories should support oil prices.
In the Middle East, Israeli tanks moved deeper into Gaza’s Rafah, reaching residential areas where more than a million people had taken shelter, and Israeli forces pounded the north of the enclave in attacks among the fiercest in months. (Reporting by Katya Golubkova; editing by Lincoln Feast)
