Investing.com - Oil prices rallied more than 4% in North American trade on Thursday, adding to overnight gains, as a huge wildfire in Canada disrupted its oil sands production.
The fire, in Alberta, Canada, has forced the evacuation of 88,000 people. Some oil pipelines in the region were shut as a precaution, while output at several facilities has been disrupted, although the volume of the decline was unclear.
Crude oil for June delivery on the New York Mercantile Exchange rallied $1.50, or 3.43%, to trade at $45.28 a barrel by 13:38GMT, or 09:38AM ET, after rising by more than 4% to a daily peak of $46.02.
A day earlier, Nymex prices inched up 13 cents, or 0.3%, as investors digested the sharpest one-week production decline in U.S. production in nearly a year and a stronger than expected build in domestic crude stockpiles last week.
Crude inventories rose 2.8 million barrels in the week to April 29 to 543.4 million barrels, a fresh record high.
More critically, U.S. production decreased by 113,000 barrels per day last week suffering its strongest weekly decline since last July. Domestic output in the U.S. has now fallen in 11 consecutive weeks, dropping to its lowest level since September, 2014.
Nymex oil prices are up nearly 50% since falling to 13-year lows at $26.05 in February, as a decline in U.S. shale production boosted sentiment. However, analysts warned that market conditions remained weak due to an ongoing glut.
Elsewhere, on the ICE Futures Exchange in London, Brent oil for July delivery advanced $1.49, or 3.34%, to trade at $46.11 a barrel after falling 35 cents, or 0.78%, on Wednesday.
Brent was pushed higher by escalating fighting in Libya. A Tripoli-based oil official warned the country's oil output could fall by 120,000 barrels per day if the Benghazi-based National Oil Corporation, set up by the rival eastern government, continues to block tankers loading for Tripoli from the eastern Marsa el-Hariga port.
Brent futures prices are up by roughly 45% since briefly dropping below $30 a barrel in mid-February, despite the collapse of talks at a Doha summit in April aimed at achieving a production freeze among OPEC and Non-OPEC producers. OPEC meets on June 2 in Vienna and may discuss the freeze initiative again.
Meanwhile, Brent's premium to the WTI crude contract stood at 83 cents a barrel, compared to a gap of 84 cents by close of trade on Wednesday.