Newspaper article The Canadian Press

Energy Stocks Push TSX Lower, Supply Concerns Push Oil below US$75 a Barrel

Newspaper article The Canadian Press

Energy Stocks Push TSX Lower, Supply Concerns Push Oil below US$75 a Barrel

Article excerpt

TSX down amid heavy slate of earns, lower oil


TORONTO - Energy stocks helped push the Toronto stock market lower Thursday as concerns about oversupply pushed crude oil prices below US$75 a barrel for the first time in four years.

The S&P/TSX composite index dropped 77.43 points to 14,778.77. The Canadian dollar declined 0.47 of a cent to 87.9 cents US.

New York's Dow industrials gained 40.59 points to 17,652.79, the Nasdaq rose 5.01 points to 4,680.14 and the S&P 500 index was 1.08 points higher at 2,039.33.

The energy sector was the leading TSX decliner, down 2.9 per cent as crude oil prices fell $2.97 to US$74.21 a barrel.

The latest drop came as the U.S. Energy Information Administration said U.S. oil supplies decreased 1.7 million barrels last week, much more than the 500,000 barrel drop that analysts had expected. However, gasoline inventories rose by 1.8 million barrels against an expected 280,000 decrease.

Oil has been trading at or near multi-year lows amid slow economic growth in many regions and increased U.S. production. But many analysts think the move down has been overdone and economic fundamentals suggest oil should be around $90 a barrel. In fact, lower prices could create the conditions that would send crude higher.

"We think North American producers will start scaling back production in a meaningful way," said Alison Mendes, portfolio manager at Manulife Asset Management. Mendes said falling prices will force marginal producers to stop producing or cut back.

"We're going to start seeing the 2015 capital expenditure budgets released over the next couple of weeks and we would not be surprised to see companies announce spending plans flat to down versus 2014. And capital programs at the end of the day have to exist within cash flows."

The gold sector was down about 1.25 per cent even as December bullion in New York rose $2. …

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