Crude prices extended gains in Asia Monday as raging wildfires hit production in Canada, while traders digested news that Saudi Arabia had replaced its oil minister.
At about 0330 GMT, US benchmark West Texas Intermediate for June delivery was up 75 cents at $45.41 a barrel while North Sea Brent was up 51 cents at $45.77.
Saudi Arabia, the biggest exporter in the OPEC producers’ group, on Friday replaced Ali al-Naimi — who had been in his post for two decades — with a close ally of the deputy crown prince.
He will be replaced by Khaled al-Falih, the longtime head of state oil giant Saudi Aramco and an ally of Prince Mohammed bin Salman, who has taken charge of economic policy and has embarked on a drive to transform the economy to reduce its dependence on oil.
“The appointment of a new minister shows that the Saudis are trying to rejuvenate the market and are serious about trying to reduce production,” CMC Markets senior sales trader Alex Wijaya told AFP.
“So there’s a lot of positive outlook in the markets, which we’re seeing translate into higher prices,” Wijaya said.
Naimi was one of the most powerful figures within the OPEC oil cartel but his influence has recently appeared to have been curbed by the growing power of Prince Mohammed.
The raging wildfires in Canada’s Alberta region has forced producers to cut output by a million barrels a day. The blaze are ravaging the area around Fort McMurray, the centre of Canada’s massive oil sands deposits, and forced producers to shut down operations.
However, price rises were tempered by data showing another fall in Chinese exports and imports last month, in the latest sign of weakness in the world’s second largest economy and top energy consumer.
“This may further apply pressure on oil prices,” said EY oil and gas analyst Sanjeev Gupta.