Oil prices posted slight gains on Tuesday in Asia, finding support from China’s latest stimulus move, while Canadian wildfires put oil hubs in the country at serious risk.
July contract Brent crude oil futures traded 0.13% higher at $83.47 per barrel, while the US West Texas Intermediate (WTI) crude futures rose 0.14% to $78.71 per barrel.
Despite the surge, further increases were curbed by upcoming US consumer and producer inflation data this week, which may impact the Federal Reserve’s plans on interest rates. The dollar’s continued resilience also kept prices in check.
China Starts Bond Sale, Canada Wildfires Signal Disruptions
Oil markets welcomed Beijing’s decision to start selling the first batch of its CN¥1 trillion ($138 billion) of ultra-long special bonds this week, aimed at strengthening the world’s second-largest economy.
The country’s Ministry of Finance said it will kick off the series of sales this week with the issuance of CN¥40 billion of 30-year bonds on Friday.
Chinese ministers stated that the bonds will be used to improve the country’s slow economic growth, which has been weighed down by a property sector crisis and weak consumer sentiment.
The bonds will be rolled out in crucial segments, including infrastructure, which could be vital to helping the top crude importer reach its 5% annual growth target.
Chinese authorities mainly reported the announcement, but it still indicated better economic conditions for China and provided clarity to months of uncertainty over the timetable of the bonds’ issuance. The stimulus bonds will be the fourth in 26 years.
In Canada, meanwhile, destructive wildfires across the Western part of the country have sparked the possibility of oil and gas supply disruptions as the blazes moved closer to a key oil hub.
An evacuation alert has been issued at the major Canadian oil town of Fort McMurray, Alberta, as the province observed two out-of-control fires.
Home to the country’s largest oil-sands operations, Fort McMurray suffered serious damages from massive wildfires in 2016, which saw thousands of residents evacuate and over 1 million barrels per day (bpd) of oil output suspended.
Still, the city received some help from the weather, with rains easing the immediate risk posed by the fires, although its 70,000 residents have been advised to stay alert.
Canada’s oil and gas industry, which is significant to North American oil markets, might face supply disruptions should wildfire activity in the country increase further.
In 2023, Canada’s worst wildfire season resulted in the temporary shutdown of about 300,000 bpd of domestic oil production.
