May 17, 2016 11:01 am
Updated: May 17, 2016 11:11 am

Blame Canada, Nigeria: Oil prices hit 6-month highs

Oil prices are up 85% from 14-year lows recorded in February.

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The price of a barrel of oil has hit its highest level in nearly seven months — nearly US$50 a barrel — thanks mainly to supply reductions caused by unrest in Nigeria and the Fort McMurray wildfire.

U.S. crude prices rose by 43 cents a barrel Tuesday morning to US$48.15 on the New York Mercantile Exchange. Brent Crude, used to price international oils rose to US$49 a barrel in London on Tuesday morning.

That’s the highest level since Nov. 3, 2015.

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READ MORE: Fort McMurray wildfire: Mandatory evacuation issued for camps north of city

On Monday, prices were up $1.51, propelling New York and Toronto stock markets to big gains.

The recovery in the price of oil towards $50 a barrel is being viewed by stock investors as a sign of an improving global economy. Jitters over the outlook had been one of the reasons why oil fell to 14-year lows of about $26 a barrel in February.

The price of oil has jumped by 85 per cent since hitting those multi-year lows.

READ MORE: Should Canadians be cheering for lower or higher oil prices?

The current surge in prices comes amid a big drop in Nigerian oil production. Attacks by militants on oil installations in the Niger Delta region have cut output to 1.4 million barrels a day. The Nigerian government’s budget is based on production of 2.2 million barrels a day.

READ MORE: Canada’s economy to take a hit from Fort McMurray wildfires: economists

Here in Canada, the shutdown of oilsands operations because of the Fort McMurray wildfire has also led to a big drop in oil production. The Conference Board of Canada estimates that the fire has led to a loss in production of 1.2 million barrels of oil a day for two weeks.

That works out to a loss of almost $1 billion in production – or a cut of about 0.33 per cent in Alberta’s gross domestic product for this year.

— With files from the Canadian Press, Associated Press

© 2016 Global News, a division of Corus Entertainment Inc.

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