Crude has best-ever month, rising 88%

TORONTO — Canada’s oilpatch has little to celebrate, even though crude oil prices concluded their best-ever month.

The price of West Texas Intermediate surged 88 per cent in May as it gained 5.2 per cent Friday to reach $35.47 US per barrel.

That’s a huge turnaround from the April 2 low of $11.57 US — and up from $18.84 US at the end of April — but it’s about $30 US below where crude was in January.

“It’s not as dire as it was, but it’s still not a very good situation either,” said Colin Cieszynski, chief market strategist at SIA Wealth Management.

“It’s still a low price where not very many people are going to be making money and it’s still going to be a challenge for stocks, no question about it, and for companies.”

He said people initially thought the price floor would be $40 US and now it’s looking more like within the $30s.

“We’re not in the teens, but it’s still not a great situation out there.”

The July crude contract was up $1.78 US at $35.49 US per barrel, and the July natural gas contract was up 2.2 cents at nearly $1.85 US per mmBTU.

Nonetheless, the energy sector lost 1.3 per cent Friday as shares of Husky Energy Inc. lost 7.4 per cent.

The Canadian dollar traded for 72.53 cents US compared with 72.65 cents US on Thursday.

Health care plunged 7.6 per cent on the day as Canopy Growth Corp. lost 20.8 per cent and Aurora Cannabis Inc. was down 9.1 per cent.

The heavyweight financials sector was down about two per cent. Laurentian Bank sank 9.1 per cent after it was the only Canadian bank to cut its dividend during a tough quarter in which profits dropped after they took large provisions for loan losses.

The Montreal-based bank’s move leaves the door open for other banks to cut their dividends in a future quarter, Cieszynski said.

Technology had the strongest performance on the day while materials was higher on a rise in gold prices.

The August gold contract was up $23.40 US at $1,751.70 US an ounce, and the July copper contract was up 1.2 cents at nearly $2.43 US a pound.

Overall, the S&P/TSX composite index closed down 69.90 points at 15192.83 after hitting an intraday low of 15092.89.

The Toronto market gained nearly 2.8 per cent during May.

In New York, the Dow Jones industrial average was down 17.53 points at 25383.11. The S&P 500 index was up 14.58 points at 3044.31, while the Nasdaq composite was up 120.88 points at 9489.87, the highest level since Feb. 21.

North American stock markets climbed in the afternoon after U.S. President Donald Trump’s news conference on China failed to deliver any changes to the trade agreement between the world’s two largest economies.

Investors were nervous about what Trump would do in response to China’s imposition of a new security law on Hong Kong.

Concerns lessened as the news conference was delayed. In the end, Trump said the U.S. will terminate its relationship with the World Health Organization over its handling of the coronavirus outbreak in China, begin the process of withdrawing special trade benefits for Hong Kong and cancel visas of some Chinese citizens.

The worst-case scenario for markets would be if the U.S. affected the trade deal. But alternative actions would leave investors saying they can live with that, Cieszynski said.

Downward market movement ahead of the news conference shows that people are still on edge about the pace of economic recovery from the pandemic lockdown, he said.