Oil prices have increased after widespread wildfires in Canada resulted in production cuts.

Brent crude futures LCOc1 edged-up 72 cents to $46.02 a barrel, while the US crude futures CLc1 increased 91 cents to $45.57 a barrel, Reuters reported.

Following the fire that broke out on 1 May, three major oil firms were forced to warn that they cannot deliver some contracts for Canadian crude.

Barclays Capital commodities strategist Miswin Mahesh told the news agency: "Positioning has been already very stretched in the oil market … Some must have taken the opportunity to exit, so that’s one angle that momentum is slowing down."

"Positioning has been already very stretched in the oil market."

Canadian officials are now optimistic as favourable weather helped fire fighters to drive the flames away from Fort McMurray, the oil sands town.

However, no timeline has been set as to when the operations at evacuated sites will restart.

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Shale oil output in the US is declining and production is also witnessing a fall in Latin America, Asia and Nigeria.

Investors are also watching Saudi Arabia, which replaced oil minister Ali al-Naimi in a major government reshuffle that stiffened competition from Russia.

Image: US crude futures increased 91 cents to $45.57 a barrel. Photo: courtesy of jk1991/ FreeDigitalPhotos.net.