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

  • Judge to hear arguments on Dakota Access oil pipeline work

    Economic CTV News
    BISMARCK, N.D. -- A federal judge will hear arguments Tuesday about whether to stop the final bit of construction on the disputed Dakota Access pipeline, perhaps just days before it could start moving oil. U.S. Source
  • Interac e-transfers back on line after 5-hour outage

    Economic CTV News
    TORONTO -- Interac says its e-transfer and Interac Online services are up and running again following an outage on Monday evening. The debit card service says a technical issue "knocked the network out for about five hours. Source
  • Asia stocks advance ahead of Trump speech, China congress

    Economic CTV News
    HONG KONG -- Asian stocks were mostly higher Tuesday after another strong finish on Wall Street as investors awaited a speech by President Donald Trump to the U.S. Congress. KEEPING SCORE: Japan's benchmark Nikkei 225 index added 0.6 per cent to 19,214.68 and South Korea's Kospi rose 0.4 per cent to 2,092.57. Source
  • Uber executive out after failing to disclose sexual harassment allegation: report

    Economic CTV News
    NEW YORK - A top engineering executive at Uber, Amit Singhal, is out five weeks after his hire was announced. According to a report in the tech blog Recode, he failed to disclose that he'd left his previous job at Google because of a sexual harassment allegation. Source
  • Bell Media names Randy Lennox president after Mary Ann Turcke leaves

    Economic CBC News
    Bell Media has named Randy Lennox as its president following the departure of Mary Ann Turcke for a new opportunity with the NFL. Lennox, a former executive at Universal Music Canada, joined the media giant in August 2015 as president of entertainment production and broadcasting. Source
  • Bell Media names Randy Lennox as new president

    Economic CTV News
    MONTREAL - Bell Media has named Randy Lennox as its president following the departure of Mary Ann Turcke for a new opportunity with the NFL. Lennox, a former executive at Universal Music Canada, joined the media giant in August 2015 as president of entertainment production and broadcasting. Source
  • Are loyalty programs even worth it anymore?

    Economic CTV News
    MONTREAL -- The value of customer loyalty programs is under increased scrutiny by companies and users in the wake of Air Miles' recent reversal of an unpopular expiration policy. The operator of the shopper reward program, LoyaltyOne, angered many members last year with its proposal to void unused Air Miles after five years, only to abandon that plan weeks before it was to take effect. Source
  • Manulife admits fine by money-laundering watchdog Fintrac

    Economic CTV News
    TORONTO -- Manulife Financial Corp. confirmed Monday its banking unit was penalized last year after Canada's money-laundering watchdog concluded it failed to report a suspicious transaction and various money transfers. Last year, Fintrac fined the bank $1.15 million, but it withheld the bank's identity, saying it was exercising its discretion to do so. Source
  • B.C. increasing minimum wage to $11.35

    Economic CTV News
    VICTORIA - The minimum wage in British Columbia will rise by 50 cents to $11.35 an hour in mid-September. The ministry says there will be an identical increase of 50 cents to the minimum wage for liquor servers, bringing it to $10.10 per hour in September. Source
  • 5 billion mobile phone users projected for 2017: study

    Economic CTV News
    With populations in Asia on the rise, the number of mobile phones, which stood at 4.8 billion a year ago, should mushroom to 5.7 billion, or three quarters of the world's population, by 2020. The number of mobile phone users globally will surpass five billion by the middle of this year, according to a study released Monday by GSMA, the association of mobile operators. Source