TORONTO – The price of oil continued its slide on Wednesday with a third consecutive day of losses, as it and other commodities dragged down the Toronto Stock Exchange’s main index.
“For the Canadian market really not much is working today … given our significant reliance on the resource stocks,” said Monika Skiba, a senior portfolio manager at Manulife Asset Management.
The December crude contract shed 78 cents US to US$49.18 a barrel on Wednesday. The price of oil has lost US$1.67 since Monday’s close.
Wednesday’s drop came partly from news that the National Energy Board downgraded its long-term outlook for oil prices and Canadian production, Skiba said.
The NEB projects inflation-adjusted oil prices to be US$68 a barrel by 2020 and US$90 by 2040, which is US$12 and US$17 a barrel lower, respectively, than its January report.
It also projects oil production will increase to 5.7 million barrels a day by 2040, several hundred thousand barrels a day less than its previous report.
While this news impacted crude’s value, Skiba said “OPEC really is the driver,” adding that more clarity on prices will come after the Organization of the Petroleum Exporting Countries’ meeting on Nov. 30. The group’s 14 members are expected to hash out a plan to cut oil production.
Skiba said Iraq’s recent request to be exempted from the arrangement has again raised questions about whether the members will be able to cut production enough. That uncertainty has lowered energy prices, she said.
December gold contracts also fell Wednesday, dropping $7.00 to US$1,266.60, as the market again contemplates whether America’s central bank will raise interest rates in December.
It’s now maybe less likely America will see negative interest rates, said Skiba, which isn’t great for gold.
The gold sector was among the worst performing in Toronto’s S&P/TSX composite index. It fell nearly threeper cent, while the energy sector dropped more than one per cent. The TSX slipped by 63.07 points to 14,807.56.
“So we have a lot of areas of weakness in the market and not enough to carry it to a positive territory,” Skiba said.
In New York, the Dow Jones industrial average gained 30.06 points to 18,199.33, while the S&P 500 fell 3.73 points to 2,139.43. The Nasdaq composite lost 33.13 points to 5,250.27.
The Canadian dollar, meanwhile, was at 74.73 cents US, down 0.17 of a U.S. cent.
Elsewhere in commodities, December natural gas shed 11.3 cents to US$3.04 per mmBTU and December copper contracts were relatively unchanged at about US$2.15.
Follow @AleksSagan on Twitter.