Oil dips to lowest point in months
TORONTO — North American stock indexes were barely changed Thursday as traders marked the eight-year anniversary of the bull market and looked ahead to the release of a critical U.S. jobs report.
In Toronto, the S&P/TSX composite index ended flat, dipping 0.14 of a point at 15,496.84. Losses in metals were offset by advances in the energy sector after a $12.7 billion deal in the Alberta oilsands involving Canadian Natural Resources, Royal Dutch Shell and Marathon Oil.
The blockbuster deal lifted shares in Canadian Natural by nearly 10 per cent, or $3.88, to $43.31 on the Toronto stock market. It also helped drive up the energy sector to be the index’s leading gainer, climbing by 1.62 per cent.
Even though oil stocks were higher, the price of the commodity dropped to its lowest price since December, as the April crude contract fell $1 a $49.28 per barrel, after losing five per cent on Wednesday.
Energy prices have been depressed in the past few weeks, with the situation exacerbated after a recent report by the U.S. Department of Energy showed that oil reserves grew by eight million barrels last week, far more than analysts anticipated.
The 14-member Organization of the Petroleum Exporting Countries have made efforts to lift prices by agreeing to cut production by 1.2 million barrels a day starting in January for six months. Other non-OPEC members including Russia and 10 other nations also agreed to scale back production by 558,000 barrels a day for the same period.
But John Stephenson, CEO of Stephenson & Co. Capital Management, said he foresees that crude prices will continue to slump until it reaches the $45 to $50 range.
“The reality is we have some headwinds for oil and there is no obvious solution,” he said.
“OPEC is doing what it can, Saudi Arabia is kind of eating it, as you will, or taking the lion’s share of the cuts because they want to ensure that this works.”
The lower oil price also hurt the Canadian dollar as the loonie fell for a ninth session in a row, dropping 0.08 of a U.S. cent to 74.03 cents US — its lowest level this year.
Meanwhile, New York markets saw scant gains. The Dow Jones average added 2.46 points to 20,858.19, the S&P 500 rose 1.89 points to 2,364.87, and the Nasdaq composite index was up 1.26 points to 5,838.81.
Traders were awaiting the release of the U.S. government’s February jobs report on Friday. If the data meets expectations or exceeds them, it will be an indication that the economy is continuing to strengthen and will give the U.S. Federal Reserve even more reason to raise interest rates at its meeting from March 15 to 16.
Wall Street also celebrated the eightyear anniversary of the bull market Thursday. It was on March 9, 2009 that stocks finally hit bottom in the financial crisis, after the Standard & Poor’s 500 index lost 55 per cent in 17 months and gutted retirement and other investment accounts.
The next day, the S&P 500 perked up by 6.4 per cent, and it’s been racing higher ever since thanks to extraordinary stimulus from the Fed and a recovery in corporate profits.
In other commodities, the April gold contract fell $6.20 at US$1,203.20 an ounce, May copper contracts were down two cents to US$2.58 a pound and April natural gas contracts were up seven cents at US$2.97 per mm BTU.
Meanwhile, U.S. Secretary of State Rex Tillerson said he won’t be involved in the decision-making process for the Keystone XL pipeline after a lengthy career in the oil industry that included investments in Alberta’s oilsands. His department sent a letter to Greenpeace announcing he moved last month to recuse himself from any involvement in the Keystone file.