TSX declines as oil prices fall back

Falling oil stocks helped pull the Toronto stock market lower Wednesday as further signs of rising crude inventories in the U.S. sent oil prices tumbling. The S&P/TSX composite index dropped 67.23 points to 14,995.65, paced by a 4-per-cent drop in the energy sector.

The Canadian dollar — a big beneficiary of the recent rally in oil prices — tumbled 1.08 cents to 79.59 cents (U.S.) after rising two cents over the previous two sessions.

U.S. indexes were mixed amid positive news on the employment front two days before the release of the U.S. government’s jobs report for January.

Payroll firm ADP reported that the American private sector created 213,000 jobs last month.

Overall, economists are expecting the government data to show the economy created 233,000 jobs in January.

Other data showed greater expansion of the U.S. service sector last month. The Institute for Supply Management’s non-manufacturing index rose to 56.7 from 56.5.

The Dow Jones industrials gained 6.62 points to 17,673.02, the Nasdaq was down 11.04 points at 4,716.7 and the S&P 500 index shed 8.52 points to 2,041.51.

Crude prices gave back a chunk of the 19-per-cent surge registered over the previous four sessions, down $4.60 to $48.45 a barrel. Prices start- ed heading higher late last week following a string of cutbacks in capital spending by oil companies — and in some cases production cuts — raising hopes for relief from a huge imbalance in demand and supply.

However, data released Wednesday by the Department of Energy showed U.S. inventories last week rose by 6.3 million barrels, much higher than the 2.8-million-barrel increase that analysts had expected.

Analysts have warned that oil prices could retest lows of $44 or even move lower. In the meantime, investors are trying to look past the volatility in the markets.

“You look through the valley, as we say. The thing that you have to remember is that equity markets look six months ahead,” said Chris King, portfolio manager and vice-president at Morgan, Meighen and Associates.

He pointed out that the U.S. is dramatically cutting shale production while many Canadian companies have announced substantial cuts in spending plans.

The other big TSX decliner was the base metals sector, which advanced over the last few days on a run-up in copper prices. The sector gave back 2.65 per cent even as March copper added a penny at $2.59 a pound.

The gold sector was the leading advancer, up 2.7 per cent as April bullion climbed $4.20 to $1,264.50 an ounce.

The TSX was also supported by strong gains in the consumer staples and tech sectors.