NEW YORK – Oil prices hit a fresh multi-month high Wednesday before retreating after hawkish US Federal Reserve meeting minutes strengthened the dollar, AP reports.
Oil prices were in the black for much of the session, due in part to production outages resulting from Canadian wildfires, which have worsened again over the last 48 hours.
However, oil prices plunged into negative territory after the Fed’s minutes from its April policy meeting kept open the door to raising interest rates in June. That lifted the dollar, creating downward pressure on oil, which is traded in the US currency.
US benchmark West Texas Intermediate for delivery in June ended down 12 cents at $48.19 a barrel on the New York Mercantile Exchange. Brent North Sea oil for July delivery dropped 35 cents to $48.93 a barrel in London.
US government data showed another drop in American oil production and higher consumption of gasoline and other refined products. However, the data also showed US inventories rose 1.3 million barrels in the week ending May 13.
In Canada, hopes of soon restoring 1.2 million barrels of oil production per day from the Alberta oil sands region were dashed when 8,000 workers were ordered out late Monday after fires spread and intensified.
The blaze on Tuesday destroyed a 665-room lodge housing oil workers north of Fort McMurray, while two others on the same road with a total of 4,000 rooms were at risk.
Tradition Energy’s Gene McGillian still does not expect Canadian production to be curtailed for an extremely long period.
A push above $50 a barrel could also trigger some oil operators to restore production, he said.
The market “is getting pretty frothy,” McGillian added.