The price of oil fell to its lowest level in six months Wednesday, as the energy sector weighed heavily on Canada’s largest stock index.
The Toronto Stock Exchange’s S&P/TSX composite index shed 209.62 points, or 1.36%, to finish at 15,170.13. Crude, gold and materials stocks racked up the biggest losses.
Shares of major oil companies — including Encana (TSX:ECA), Canadian Natural Resources (TSX:CNQ) and Suncor (TSX:SU) — were all lower after the U.S. government said oil supplies shrank only slightly last week and gasoline stockpiles grew.
The statistics drove the July crude contract down $1.73 at US$44.73 per barrel, its lowest price since Nov. 14.
The International Energy Agency warned that OPEC’s plan to cut production and support prices are likely to be undone by increased output in non-OPEC countries like the United States.
The IEA said in its monthly oil report that it expects non-OPEC production to grow 700,000 barrels daily this year and 1.5 million barrels next year, “which is slightly more than the expected increase in global demand.”
Meanwhile, it was a jam-packed day for economic news south of the border.
In New York, stock markets were mixed amid an announcement by the Federal Reserve that it’s hiking its key interest rate by a quarter point to a range of 1% to 1.25%. It’s the third time the central bank has raised rates since December.
The Dow Jones industrial average gained 46.09 points to hit 21,374.56, a new record high. The S&P 500 index shed 2.43 points to 2,437.92, and the Nasdaq composite index was down 25.48 points at 6,194.89.
Kathryn Del Greco, a TD Wealth investment adviser, says the hike shows that Fed policy-makers still believe that the U.S. economy is growing, despite some signs of short-term weakness.
“This is providing a good vote of confidence in the U.S. economy. It is highlighting that it is slow growing but at least it is expanding,” Del Greco said.
Earlier, the Commerce Department reported that people spent less money at gas stations, department stores and electronics retailers last month. The result was a surprise to analysts, who expected retail sales to grow.
The Labor Department also said consumer prices slipped, mostly thanks to lower energy prices. That showed how little inflation there has been in the economy, a continued concern for the Fed.
In commodities, the August gold contract was up US$7.30 to US$1,275.90 an ounce. The July copper contract was down US2 at US$2.57 a pound, and the July natural gas contract was down US3¢ at US$2.93 per mmBTU.
The Canadian dollar was trading up 0.17 of a U.S. cent to an average price of US75.71¢.
With files from The Associated Press