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.


Latest Economic News

  • Tickets without barcodes: Concert venues experiment with new systems

    Economic CBC News
    When fans score tickets for events at the Burton Cummings Theatre in Winnipeg in the future, they might notice the absence of a familiar feature: that ubiquitous zebra-styled inventory tracker bar that adorns almost every retail product imaginable. Source
  • The dirty truth about makeup and the oil change debate: CBC's Marketplace consumer cheat sheet

    Economic CBC News
    Miss something this week? Don't panic. CBC's Marketplace rounds up the consumer and health news you need. Want this in your inbox? Get the Marketplace newsletter every Friday. Internet prices dialing up Your internet bill could get even more pricey. Source
  • After overcharging for bread, should Loblaws demand ID for a $25 gift card?

    Economic CBC News
    Jenn Iskiw says she'll be grocery shopping elsewhere after feeling betrayed by Loblaws — twice. First, for artificially inflating the price of bread for 14 years, and second, for demanding she send ID to get a $25 gift card offered as compensation for bread price fixing. Source
  • Facebook suspends data analytics firm that worked for Trump campaign

    Economic CBC News
    The Massachusetts attorney general said on Saturday her office was launching an investigation after reports that Cambridge Analytica had harvested private information from more than 50 million Facebook users in developing techniques to support U.S. President Donald Trump's 2016 election campaign. Source
  • Trump's goal of 'energy dominance' could change the global balance of power

    Economic CBC News
    Fuelled by technological breakthroughs and cuts to taxes and regulation, the United States is on target to become the world's biggest producer of crude oil in the next five years. Let that sink in. The U.S will be bigger than Russia and Saudi Arabia. Source
  • How to avoid spending money on unnecessary oil changes

    Economic CBC News
    Oil changes are by far the most common service performed on vehicles in Canada. Customers pay quick lube facilities, private garages and dealer maintenance centres well over a billion dollars a year for the service. But a CBC investigation finds many of us may be changing our oil far more often than automakers require. Source
  • Trans Mountain protester arrested, one day after court grants injunction

    Economic CTV News
    BURNABY, B.C. -- Burnaby RCMP say they arrested a woman who chained herself to a work truck Friday morning, one day after the B.C. Supreme Court granted Trans Mountain an injunction against demonstrators. Just before 8 a.m. Source
  • Enbridge, TransCanada shares flat after steep dive due to U.S. tax ruling

    Economic CTV News
    CALGARY -- Shares in Canadian pipeline companies Enbridge Inc. and TransCanada Corp. failed to recover fully Friday from a steep sell-off on Thursday after the U.S. said it would eliminate a tax break for owners of certain interstate pipelines. Source
  • WestJet union drive helped by unhappiness with pay formula, says flight attendant

    Economic CTV News
    MONTREAL -- A WestJet flight attendant says rules that effectively pay starting workers less than minimum wage because they're compensated only for time in the air is helping shore up support for a union drive at Canada's second-largest airline. Source
  • Sask. premier blasts 'mind-boggling' rail backlog of grain shipments

    Economic CTV News
    REGINA -- Saskatchewan Premier Scott Moe says it's mind-boggling that grain shipments have been delayed again by rail backlogs this year. Moe told the Saskatchewan Association of Rural Municipalities on Friday that this is the second time in four years that grain shipments have been delayed. Source