Oil prices extend gains as US plans to refill reserve amid Canada wildfires

Oil prices rose for a second day early on Tuesday, as US plans to purchase oil for the Strategic Petroleum Reserve (SPR) lent support while raging wildfires in Canada fuelled supply worries.

Brent crude futures rose 31 cents, or 0.4 per cent, to $75.54 a barrel by 0043 GMT, while US West Texas Intermediate crude was at $71.38 a barrel, up 27 cents, or 0.4 per cent.

Both benchmarks rose more than 1% on Monday, reversing a 3-session losing streak.

The US Department of Energy said on Monday it would buy 3 million barrels of crude oil for the SPR for delivery in August, and asked that offers be submitted by May 31.

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"The market got a boost from expectations that the US repurchase of oil for the strategic reserve will continue if WTI prices fall near or below $70 a barrel," said Toshitaka Tazawa, an analyst at Fujitomi Securities Co Ltd.

"Behind the gain was also bargain-hunting by some investors after the recent sharp declines," he said.

Last week, Brent and WTI futures fell for a fourth straight week over fears of a US recession and risks of a historic default on government debt in early June. The benchmarks last recorded a similar streak of weekly declines in September 2022.

Oil prices on Tuesday, however, drew support from supply worries stemming from wildfires in Canada.

The widespread blazes in Alberta, Canada forced more than 30,000 people out of their homes at one point and shuttered at least 319,000 barrels of oil equivalent per day (boepd), or 3.7 per cent of national production.

Global crude supplies could also tighten in the second half as OPEC+ - the Organization of the Petroleum Exporting Countries and allies including Russia - plan additional output cuts.

On the other hand, US oil output from the seven biggest shale basins is due to rise in June to the highest on record, data from the Energy Information Administration showed.

Venezuelan state energy company PDVSA's new management expects to boost the country's oil production to 1.17 million barrels per day (bpd) by year end while increasing refining and exploration activities, an internal planning document showed.