Crude oil prices drop to low­est since Fe­bru­ary

Winnipeg Free Press - - BUSINESS / OIL - ROSS MAROWITS

TORONTO — Crude oil prices dipped to near a nine-month low as they fell for a 10th con­sec­u­tive day, po­ten­tially hav­ing an im­pact on the Bank of Canada in­ter­est rate de­ci­sion next month.

West Texas In­ter­me­di­ate dipped to a low of US$59.26 be­fore clos­ing off 83 cents or 1.4 per cent to US$59.84.

Since its peak last month, WTI is down about 22 per cent as it ex­pe­ri­enced a fifth con­sec­u­tive weekly drop.

And the De­cem­ber crude con­tract was down 48 cents at US$60.19 per bar­rel to the low­est level since Fe­bru­ary.

A glut of oil pro­duc­tion is the main cause of the de­clines in prices of WTI and Brent crude.

The United States has taken the crown as the world’s lead­ing oil pro­ducer af­ter out­put in­creased by two mil­lion bar­rels per day over the last year to reach 11.6 mil­lion bpd.

At the same time, OPEC is over­pro­duc­ing and sanc­tions have been wa­tered down against Iran as the U.S. granted waivers on the sanc­tions to eight coun­tries over con­cerns that a com­plete end of Ira­nian im­ports would cause eco­nomic dis­rup­tions.

“But sen­ti­ment has also driven down the prices with fears on global growth weak­en­ing and there­fore slow­ing oil de­mand,” says Ca­van Yie, a port­fo­lio man­ager at Man­ulife As­set Man­age­ment.

“It’s been a chal­leng­ing year so far for the en­ergy patch,” Yie said.

Low Cana­dian oil prices are hav­ing a neg­a­tive im­pact on gov­ern­ment tax rev­enues and the Al­berta econ­omy, which will likely im­pact the Bank of Canada’s rate hike de­ci­sion next month, he said.

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