TSX loses two per cent as oil falls below US$28 a barrel

TORONTO -- The price of oil fell Tuesday to levels not seen in nearly 13 years, dragging down the Toronto Stock Exchange by two per cent as investors grow increasingly concerned there is too much crude on the markets.

See Full Article

The S&P/TSX composite index dropped 252.75 points to close at 12,282.65, capping off a third consecutive session of losses. The largest sector declines were seen in energy, metals and mining and financials.

The downturn accompanied yet another big plummet in oil prices as the March contract for North American benchmark crude fell $1.75 to US$27.94 a barrel -- a drop of nearly six per cent.

The last time oil depreciated to such levels was in September 2003.

The loss comes after the International Energy Agency reported that crude will remain under pressure this year as supply continues to outpace demand by as much as two million barrels a day in the first quarter. Oil prices have collapsed more than 70 per cent since mid-2014.

"There is just too much supply, too many players in the game producing (oil)," said Kash Pashootan, a portfolio manager at First Avenue Advisory.

"We should not be surprised to see oil continue to go down until we see supply erode or decline -- and that hasn't happened yet."

The oversupply issue will likely not be resolved until there are closures in the West, where crude is more expensive to produce than Saudi Arabia, said Pashootan, adding that even when the price stabilizes, investors should be wary of parking their money with oil companies.

"We've had some very good years in the oil industry. Many of them have strong balances, lots of cash, and many had hedges in place. They were well-positioned to take on (this) environment," he said.

"The challenge is, no one anticipated the declines would a) be this deep, and b) last as long as they have."

A rare bright spot was the Canadian dollar, which closed 0.28 of a U.S. cent higher at 72.05 cents US.

The loonie is finding some sheen from the weakening greenback, which has been pulling back now that investors believe the Federal Reserve is set to take a more dovish approach to interest rate hikes.

"Originally, the U.S. dollar had rallied considerably pricing in these rate hikes," said Pashootan.

"Raising rates tends to strengthen currency, but now we see the Fed has backed off and take a more neutral 'Wait and see' approach and we see the U.S. dollar sell off to reflect that."

In New York, indexes bounced back from earlier lows but still ended in the red as traders looked ahead to the start of two days of Congress testimony by Federal Reserve chairwoman Janet Yellen.

The Dow Jones industrial average pulled back 12.67 points to 16,014.38, while the broader S&P 500 lost 1.23 points to 1,852.21. The Nasdaq composite index dipped 14.99 points to 4,268.76.

On the commodity markets, the April gold contract rose 70 cents to US$1.198.60 a troy ounce, copper shed five cents to US$2.04 a pound and natural gas fell four cents to US$2.10 per mmBtu.



Advertisements

Latest Economic News

  • Bogus bongs or bogus lawsuits? Pipe maker sues over fakes

    Economic CTV News
    FORT LAUDERDALE, Fla. -- Don't want to bum your buzz, but that expensive bong you got cheap to smoke your pot may be bogus. High-end German glass water pipe maker Roor and its American licensee are filing lawsuits against smoke shops and mom-and-pop convenience stores in Florida, California and New York. Source
  • 'There isn't a best card out there': How to choose a credit card that works for you

    Economic CBC News
    Credit cards are sometimes lambasted as high-cost consumer debt that can quickly get borrowers into trouble. But if you pay off the balance each month, credit cards can also have significant perks. Loyalty programs like Air Miles, which has both a standalone program and partnerships with credit cards, have drawn a lot of criticism lately, but Canadians are still attached to credit cards that offer rewards. Source
  • Chevron says it has won the latest round in an Ecuadorian legal battle

    Economic CTV News
    Oil giant Chevron Corp. says it has won a round in the Canadian courts in a complex legal battle with a group of Ecuadorian villagers who are trying to collect on a massive judgement they won in Ecuador's courts. Source
  • Liberals ask President Trump to approve Keystone XL pipeline

    Economic CTV News
    Canada’s natural resources minister says that he hopes the new U.S. administration will allow the Keystone XL pipeline quashed by Barack Obama to proceed, noting that all Canadian regulatory approvals are in place. Jim Carr spoke to CTV’s Power Play from Washington, D.C. Source
  • Apple depicts Qualcomm as a shady monopolist in US$1B lawsuit

    Economic CTV News
    SAN FRANCISCO -- Apple is suing mobile chip maker Qualcomm for $1 billion in a patent fight pitting the iPhone maker against one of its major suppliers. The 100-page complaint filed Friday in a San Diego federal court depicts Qualcomm as a greedy monopolist abusing its power in a key segment of the mobile chip market to extort royalties for iPhone innovations that have nothing to do with Qualcomm's technology. Source
  • Trump's 'America first' tone worries head of Canadian oil and gas industry group

    Economic CTV News
    Trump takes charge: Sworn in as 45th president of the U.S.A. Source
  • Obama administration urges Canada to reverse Super Bowl ad decision

    Economic CTV News
    OTTAWA - In one of its final communications with Canada, the outgoing Obama administration is engaging in pigskin politics: asking the Trudeau government to overturn a regulation affecting ads during the Super Bowl. The U.S. Source
  • Oil and stock prices higher as Donald Trump sworn in

    Economic CBC News
    Stock markets responded to the first day of the Trump Administration in a largely positive way, with the Dow Jones, the Nasdaq and the S&P 500 all higher on the day of his swearing in. The Dow Jones Industrial Average was up by nearly 100 points to 19,829 just minutes before the new president formally acceded to the position. Source
  • Stocks higher as Donald Trump lays out glimpse of future economic policies

    Economic CBC News
    Stock markets responded to the first day of the Trump Administration in a largely positive way, with the Dow Jones, the Nasdaq and the S&P 500 all higher on the day of his swearing in. The Dow Jones Industrial Average was up by nearly 100 points to 19,829 just minutes before the new president formally acceded to the position. Source
  • Stocks close higher as Donald Trump lays out glimpse of future economic policies

    Economic CBC News
    Stock markets responded to the first day of the Trump Administration in a largely positive way, with the Dow Jones, the Nasdaq and the S&P 500 all higher on the day of his swearing in. The Dow Jones Industrial Average was up by nearly 100 points to 19,829 just minutes before the new president formally acceded to the position. Source