Oil prices jumped on Monday as a huge wildfire in Canada's oil sand region knocked out over a million barrels in daily production capacity, contributing to a significant tightening of markets over the past weeks. The lost capacity is equivalent to well over a third of the country's typical daily production. U.S. crude futures were trading at $45.51 per barrel at 0214 GMT, up 85 cents, or 1.9 percent, from their last settlement. Brent crude was up 62 cents, or 1.4 percent, at $45.99 a barrel. Canadian officials on Sunday showed some optimism about the fire as favourable weather helped fire fighters, while winds took the flames away from the oil sands boomtown Fort McMurray. Still, the outages pushed up prices. "Oil prices held as concerns over the impact of raging fires in Alberta, Canada, on supply from the oil sands projects lingered," ANZ bank said on Monday. Markets were also watching Saudi Arabia, the world's biggest oil exporter, where King Salman on Saturday announced a government shake-up that included the appointment of Khalid al-Falih as head of a new super Ministry of Energy, Industry and Mineral Resources. Oil policy was previously under the Petroleum Ministry led by veteran minister Ali al-Naimi. "Saudi Arabia will maintain its stable petroleum policies. We remain committed to maintaining our role in international energy markets and strengthening our position as the world's most reliable supplier of energy," Khalid al-Falih said on Sunday. "We are committed to meeting existing and additional hydrocarbons demand from our expanding global customer base, backed by our current maximum sustainable capacity." Since 2014, Saudi Arabia has led the Organization of the Petroleum Exporting Countries ( OPEC) through a strategy aimed at defending market share rather than reducing production to support oil prices. Falih's comments were in line with analysts' views that no shift in Saudi oil policy is likely as a result of his appointment. Tightening markets support Saudi Arabia's policy of keeping production near record highs in defense of market share. Beyond the Canadian fires, U.S. shale oil output is in decline and production is also falling in Latin America and Asia, eroding a 1-2 million barrels per day supply overhang that pulled down oil prices by as much as 70 percent between 2014 and early 2016. While supplies tighten, demand - especially in Asia - is holding firm. China's monthly imports of crude oil rose 7.6 percent in April from a year ago to 32.58 million tonnes, customs data showed, lifted by strong demand from domestic private refiners.
