Set fire to the rain!
On the 4th of May 2016, a wildfire spread across Fort McMurray a Canadian town well known for its industrial production of crude oil. The fire burnt to ashes thousands of homes and spared nothing on its path.
Once known as Fort McMoney, this Canadian city can now be compared to a pile of ashes. Fort McMurray got bright days at the time when crude prices were above the $30 level line with its flourishing oil sands industry. However, this city gradually lost its sparkle as crude prices lost cent by cent due to a global oversupply which is still weighing on the commodity market.
Fort McMurray was a peaceful town surrounded by vast oil sands deposits on which it solely relied. However, since crude prices fell by 70 percent the town was in much difficulties and the residents’ purchasing power started to decline. Unexpectedly, this unfortunate wildfire which forced 88 000 residents to evacuate their homes acted as a second breath for oil prices a short moment as the production was reduced in North America due to the fire. Consequently, oil prices surged by 3 percent a day after Fort McMurray was destroyed by flames. U.S West Texas intermediate jumped by 54 cents to be traded at $44.32 and further extended gains in later sessions to be last traded at $46.07. Likewise, International Brent crude added 41 cents on that day to be traded at $45.03 per barrel and extended gains to be finally traded at $46.77 a barrel.
It is to be noted that at the beginning of the week, the commodity market was down and both benchmarks tumbled by approximately 6 percent. This decline resulted from the fact that Russia and Saudi Arabia rekindled the concerns about the global oversupply actually ruling over the industry. However, the relief crude prices got was very short as on Friday, the prices were back to the lows.