09:25 AM EDT, 06/05/2025 (MT Newswires) -- Oil prices rose early on Thursday on expectations demand is strengthening as the U.S. driving season takes hold while wildfires in northern Alberta cut into oil-sands supply.

West Texas Intermediate crude oil for July delivery was last seen up US$0.52 to US$63.37 per barrel, while August Brent crude was also up US$0.52 to US$65.38.

The rise comes as seasonal demand seen on the rise with the summer driving season taking hold, boosting the call on gasoline stocks. But supply is tightening as forest fires in northern Alberta has forced some oil-sands producers to suspend production. Cenovus Energy (CVE.TO, CVE) has shut in its 238,000 barrel per day Christina Lake project, while Canadian Natural Resources (CNQ.TO, CNQ) suspended production at its 37,000 bpd Jackfish 1 operation.

The production cuts have helped support prices as supply outside of North America is on the rise with OPEC+ returning 2.2-million barrels per day of quota cuts to market, adding 411,000 barrels per day of monthly increases in May and June with a third tranche slated for July.

"This strategy has raised concerns about a potential supply glut, especially as global stockpiles begin to build. However, prices have remained relatively resilient amid uncertainty over the broader economic impact of Trump-era trade tensions and their effect on global demand for fossil fuel-based products," Ole Hansen, head of commodity strategy at Saxo Bank, noted.

Geopolitical risk is also underpinning prices, as talks between Iran and the United States aimed at limiting the Persian Gulf's nuclear ambitions continue. Should talks fail, the United States has threatened to further limit Iran's oil exports, though there are doubts about its ability to enforce any restrictions.

"There is considerable debate amongst market participants about whether Washington can materially drive down Iranian oil exports, given that China is the principal buyer. Nonetheless, there does seem to be scope for the US to reduce the ability of third parties to act as laundromat s for Iranian barrel," Helima Croft, Head of Global Commodity Strategy and MENA Research," wrote.