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The appointment of a new oil minister in Saudi Arabia and a devastating wildfire affecting oil production in Canada have sent mixed signals over the state of oil supply, but markets remain bearish.

Former Saudi Aramco CEO Khalid al-Falih was named minister of domestic energy, industry and minerals on May 7. He takes over from Ali al-Naimi, who was first named to the post in 1995. The technocratic appointment signals a continuation of Saudi’s policy of protecting its market share, whatever the oil price, and resisting a production freeze. Al-Falih told the World Economic Forum earlier this year that, even though the price of US$30 a barrel was “irrational”, Saudi Arabia would prove resilient: “If prices continue to be low we will be able to withstand it for a long, long time,” he said.

The oil price went up late last week due to the fire that erupted in Alberta and affected half of the site’s daily oil production, as much as 1 million barrels. The price climbed over US$45 per barrel in the early hours on Monday only to fall back down again during the day. “Oil is down 3.4% as oil markets are shrugging off the outages,” Abhishek Deshpande, lead oil analyst at Natixis, told GTR on Monday. “The markets are underestimating and underpricing the wildfire. I think it is a massive news and a massive outage.”

Alberta’s production sites are not at risk, but the area is not safe for workers, who had to evacuate their homes, too. Major oil companies operating in the area, including Shell, Suncor and Syncrude have had to suspend or cut production and warn they may be unable to deliver on some contracts for Canadian crude. The damage caused to the infrastructure will inevitably cause delays in resuming production even after the fire has been put out.

“As we go into June we will enter a tighter market, and the outages will become far more important to the pricing,” says Deshpande. “The surplus right now is dampening the impact of the fire in Canada, but eventually markets will sense it, maybe next week or the week after next, and as soon as they sense it they will start pricing it.”

Canada hosts the world’s third-largest oil reserves, and the fire broke near Fort McMurray, a town built around oil production as the area is rich in oil sands. The fire erupted on May 1, and grew to engulf an area of 1,500 square metre, twice the size of Singapore.

While changing weather conditions over the weekend have helped reduce its size, experts believe it may take months to completely extinguish the blaze. Most of Fort McMurray has been destroyed and it remains unclear when the city will be inhabitable again, and well production at the oil sands plants will resume.

A research by Bank of Montreal Capital Markets estimates that the wildfire, the worst disaster in Canada’s history, could also lead to the largest catastrophe loss in the country’s history, with insured industry losses of between C$2.6bn and C$4.7bn, and reaching  evenC$9bn as a  worst case scenario.