Oil prices were again the culprit on Wednesday, but this time it was because they fell. That triggered a brief buying spree on Wall Street, but caused investors on Bay Street to lock in profits.

At close, Toronto’s S&P/TSX composite index closed down 101.18 points or 1.2% to 8362.96, while the TSX Venture Exchange slipped 10.04 points or 0.66% to 1501.5.

On Wall Street, the Dow industrial average eked out a gain after being down much of the day. It finished the day ahead 6.27 points or 0.06% at 10126.51. The Nasdaq dropped 4.36 or 0.23% to 1855.06, while the Standard & Poor’s 500 index lost 1.06 or 0.1% to 1098.63.

The Canadian dollar broke through the US76¢ mark, closing at US76.07¢, up 0.16 of a cent.

Oil futures dropped more than US$1 in New York after an unexpected rise in U.S. gasoline inventories and after OPEC said it has spare production capacity. Contributing to the price drop was a comment from troubled Russian oil company YUKOS, which said bailiffs will allow it to continue to pump oil. September crude fell $1.35 to $42.80 a barrel on the New York Mercantile Exchange.

The drop in crude prices came as the U.S. Energy Information Agency said that national gasoline stocks rose unexpectedly by 2.4 million barrels last week.

OPEC President Purnomo Yusgiantoro on Wednesday said the cartel was concerned over high prices and could immediately tap into spare production capacity, also contributing to the drop in crude prices. Russian major YUKOS, teetering on the brink of bankruptcy, said its oil exports were safe in the short term after bailiffs allowed it to use bank accounts for core operations.

Oil prices have risen by more than one-third since the end of 2003 on worries that accelerating global demand has left supplies tightly stretched with little leeway for disruption.

In Toronto, all sectors were down, with energy and gold stocks leading the way. Energy shares were off 2.71% on the day with all but a handful of mostly smaller companies in the red. Gold shares fell hard, too, down 2.75%. Financial stocks were off 0.56% and technology shares were down 1.11%.

In New York, blue-chip stocks climbed into positive territory on the strength of falling crude prices, but the technology-packed Nasdaq was kept in the negative zone by a disappointing outlook from online travel booker and media conglomerate InterActiveCorp.