Markets | Oil price dips as U.S. supply exceeds demand

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The Canadian Press

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CALGARY - Shares of Canada's biggest oilsands companies rose on the stock market Wednesday amid reports that two of the world's richest men - Warren Buffet and Bill Gates - made a surprise visit to Alberta's oilsands earlier this week.

Suncor Inc., Canada's oldest oilsands company, gained $2.59 to $58.86, a jump of 4.6 per cent, on the Toronto Stock Exchange.

Meanwhile, Canadian Natural Resources, Canada's second-largest oil and gas producer, rose $4.09 to $81.54, a gain of 5.3 per cent in trading of 3.8 million shares.

Canadian Natural hosted the Gates and Buffet tour Monday at its $9.3-billion Horizon oilsands project north of Fort McMurray, Alta., which is being developed.

Greg Stringham, vice-president at the Canadian Association of Petroleum Producers, says the two men asked the industry body to give a general overview of the oilsands and Canada's position in the energy world.

The oil sector stock gains Wednesday came as world crude prices fell to the US$113-a-barrel level after the U.S. government reported a massive increase in U.S. crude supplies amid a slowdown in fuel demand.

The Energy Information Administration, an arm of the U.S. Energy Department, said crude inventories rose by a hefty 9.4 million barrels in the week ended Aug. 15, after a big gain in imports.

The figure came in much higher than the average analyst forecast for a 1.7 million-barrel increase, according to energy information provider Platts.

However, gasoline inventories shrank by a larger-than-expected 6.2 million barrels to below-average levels, the EIA said, while distillate inventories - which include heating oil and diesel fuel - rose by less than expected.

Avery Shenfeld, senior economist at CIBC World Markets, said traders "seem to be focusing on the gasoline demand number within it and ignoring the very large buildup of crude oil on the week.

"It's surprising crude is holding in with such a strong inventory build."

As for the Gates-Buffet trip, Shenfeld said: "That's a very popular trip for all sorts of people to take (in the investment community)."

"People who are interested in the future of oil in North America have trekked up to the oilsands to see what they look like."

Bill Harris, energy and mining specialist at Avenue Investment Management in Toronto, said the world fuel supply situation had more of an impact on the oilpatch trading than the oilsands tour.

"Everybody thought the oil price was coming down and the oil market is relatively tight," said Harris. "We're just having a bounceback because everything was insanely negative two days ago."