Canadian stocks fell just short of a second-consecutive 100-point drop, while U.S. stocks sank with the Dow falling below the psychologically key 10,000 level after NYMEX crude futures set a new high on Thursday.

At close, the Toronto Stock Exchange’s S&P/TSX composite index was down 95.08 points or 1.14% at 8267.88. The TSX Venture exchange fell 2.47 points or 0.16 to 1499.03.

The Dow Jones industrial average closed down 163.48 points or 1.61% at 9963.03. The Standard & Poor’s 500 Index was down 17.93 points or 1.63% at 1080.7. The technology-laced Nasdaq Composite Index was off 33.43 points or 1.63% at 1821.63.

The Canadian dollar slipped 0.21 of a cent to US75.85¢.

After leading Bay Street into positive territory in recent days, energy stocks have helped lead the way down for the past two sessions, as investors took profits despite rising crude prices. Energy shares were off 1.14% Thursday with Petro-Canada, Suncor Energy Inc., Canadian Natural Resources and Talisman Energy posting the bigger losses amid heavy trading.

In Toronto, only two of the TSX sub-sectors – real estate and utilities — were up. In addition to energy stocks, gold (2.15%), financials (0.98%) and technology (2.17%) were big losers.

Oil prices continue to make investors on both sides of the border nervous.
On the New York Mercantile Exchange, the price of crude was up US$1.52 to US$44.35 a barrel after hitting a record US$44.40 earlier in the day.

The price of crude had dropped 3% Wednesday when the president of OPEC said the cartel had enough supply to plug short-term gaps in demand. But it reversed course in the midst of conflicting signals from Russia about oil giant Yukos.

Russia’s Justice Ministry said Thursday it had revoked permission granted by bailiffs for the company to use previously frozen funds to pay for day-to-day operations. There have also been concerns about the reliability of crude supplies from Iraq, where saboteurs have attacked pipelines and disrupted exports.

The rise and fall of oil prices has also overshadowed good employment news ahead of Friday’s release of the key July payrolls report in the U.S.

The U.S. Labour Department said the number of new people signing up for unemployment benefits dropped last week by a seasonally adjusted 11,000, to 336,000. It marks the lowest level since the beginning of July and is slightly better than analysts were expecting.

In Friday’s report, economists are looking for the U.S. economy to have created at least 240,000 jobs last month. The Canadian jobless report for July also comes out Friday. It’s expected at least 30,000 jobs were added in Canada during last month.

In the U.S., meanwhile, Wal-Mart dragged on the Dow, as the world’s largest retailer said July sales were not fueled by its namesake discount stores. July sales from U.S. retailers largely met modest expectations, but failed to excite most investors.

But it was the jump in oil prices that grabbed the spotlight. Stocks have closely mirrored the change in crude oil futures, with the stock market falling when oil futures rise.