Crude price tumbles as OPEC mulls cut

TORONTO — Reports that Saudi Arabia and Iran are making little progress on a deal to cut oil production deflated energy prices Friday, sending North American markets into the red.

Crude prices had benefited from the prospect that members of the Organization of the Petroleum Exporting Countries, set to meet in Algeria next week, would come to an agreement with regards to freezing oil output.

However, reports on Friday suggested that Saudi Arabia views the meeting more as a consultation and doesn’t expect that a concrete deal will be inked.

That sent energy prices plummeting, with the November crude oil contract down $1.84 cents to US$44.48 per barrel.

“Nothing will be decided and it certainly won’t be binding,” said John Stephenson, president and CEO of Stephenson & Co. Capital Management.

“I think the reality is, OPEC has never, ever stuck with a forecast and a quota, so it’s really just a rough guide at best.”

The Toronto stock market’s S&P/TSX composite index dropped 99.25 points to 14,697.93, while the oil-sensitive loonie lost 0.64 of a cent at 75.92 cents US.

The gold sector was the biggest decliner on the TSX, pulling back 2.02 per cent, while energy stocks slipped 1.66 per cent.

In New York, the Dow Jones industrial average fell 131.01 points to 18,261.45, while the broader S&P 500 index lost 12.49 points at 2,164.69. The Nasdaq composite dropped 33.77 points to 5,305.75.

In economic news, early data indicated that manufacturing activity in the U.S. was weaker than expected this month, pointing to a slowdown in growth.

A preliminary reading of the U.S. manufacturing purchasing managers index slipped to 51.4 in September — its lowest reading since June. That’s down from 52 in August. When the index is above 50 that indicates manufacturing activity has expanded.

North of the border, Statistics Canada released disappointing figures on both the inflation and retail sales front.

The federal agency said Canada’s annual inflation rate was 1.1 per cent last month, largely due to lower fuel prices. That compares with a 1.3 per cent year-over-year increase in July.

Meanwhile, retail trade figures showed that total sales slipped 0.1 per cent in July from the previous month.

In other commodity news, the October contract for natural gas shed 3.5 cents to US$2.955 per mmBtu while December gold contracts lost US$3.00 to US$1,341.70 per ounce. December copper rose one cent to US$2.20 per pound.