Toronto Stock Exchange Loses Two per Cent as Oil Falls below US$28 a Barrel

By Nguyen, Linda | The Canadian Press, February 9, 2016 | Go to article overview

Toronto Stock Exchange Loses Two per Cent as Oil Falls below US$28 a Barrel


Nguyen, Linda, The Canadian Press


TSX loses two per cent, oil dips below US$28

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TORONTO - The price of oil fell Tuesday to levels not seen in nearly 13 years, dragging down the Toronto Stock Exchange by two per cent as investors grow increasingly concerned there is too much crude on the markets.

The S&P/TSX composite index dropped 252.75 points to close at 12,282.65, capping off a third consecutive session of losses. The largest sector declines were seen in energy, metals and mining and financials.

The downturn accompanied yet another big plummet in oil prices as the March contract for North American benchmark crude fell $1.75 to US$27.94 a barrel -- a drop of nearly six per cent.

The last time oil depreciated to such levels was in September 2003.

The loss comes after the International Energy Agency reported that crude will remain under pressure this year as supply continues to outpace demand by as much as two million barrels a day in the first quarter. Oil prices have collapsed more than 70 per cent since mid-2014.

"There is just too much supply, too many players in the game producing (oil)," said Kash Pashootan, a portfolio manager at First Avenue Advisory.

"We should not be surprised to see oil continue to go down until we see supply erode or decline -- and that hasn't happened yet."

The oversupply issue will likely not be resolved until there are closures in the West, where crude is more expensive to produce than Saudi Arabia, said Pashootan, adding that even when the price stabilizes, investors should be wary of parking their money with oil companies.

"We've had some very good years in the oil industry. …

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