“Historic day” as the oil futures contract becomes negative; TSX increases slightly

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TORONTO –
Canada’s main stock index rose slightly to start the week, even as oil futures fell under the pressure of oversupply.

“It is a historic day. Oil futures were negative for the very first time, ”said Michael Currie, vice president and investment advisor at TD Wealth.

The May contract for northwest Texas benchmark intermediate oil, which expires Tuesday, fell from US $ 55.90 to US $ -37.63 per barrel.

This dramatic move was prompted by overproduction concerns, since well-supplied airlines and refineries are not necessarily looking for new oil deliveries.

“Basically, all the big buyers have their tanks full. The demand is falling. So they are sitting on a ton of stocks, “he said in an interview.

The June crude oil contract was in better shape, but fell more than 18% that day, falling from US $ 4.60 to US $ 20.43 per barrel.

Crude oil prices reached their lowest level since 1986 and have fallen more than 80% since the start of the year to below break-even levels, forcing Canadian producers to cut production.

Monday’s drop came despite an agreement last week between OPEC and Russia to cut production by 9.7 million barrels a day to offset some of the drop in demand.

The May natural gas contract increased 17 cents to US $ 1.92 per mmBTU.

Falling crude prices dropped the energy sector 1.5% on TSX, Shawcor Ltd., Baytex Energy Corp. and MEG Energy Corp. having lost respectively 9.3, 8.8 and 8.8%.

Currie said the sector hasn’t dropped even further because of comments over the weekend from the Canadian government promising to help the besieged industry.

Consumer discretionary, utilities and industries also fell. The consumer sector fell nearly 1.8%, with shares of Linamar Corp losing 3.6% and Restaurant Brands International Inc. 3.3%.

Technology advanced 3.2% while Shopify Inc. strengthened its position as the third largest company in Canada, with shares gaining 6.7%. Earlier today, the market value of Shopify briefly surpassed that of TD Bank for second place.

Rising gold prices helped the materials sectors grow 2.3%, while health care was higher, as cannabis producer Aurora Cannabis Inc. rose 5.1%.

The June gold contract was up US $ 12.40 to US $ 1,711.20 an ounce and the May copper contract was down almost 2.45 cents to US $ 2.32 a pound.

“I think the oil panic has pushed people to search for more gold,” said Currie.

The S & P / TSX composite index closed up 28.40 points to 14,388.28 after a change of 434 points in the day.

In New York, the US markets were all down, the Dow Jones industrial average losing 592.05 points or 2.4% to 23,650.44. The S&P 500 lost 51.40 points to 2,823.16, while the Nasdaq composite lost 89.41 points to 8,560.73.

The Canadian dollar traded at 70.99 cents US against an average of 71.24 cents US on Friday.

Currie said people are now debating whether the markets have come back too far, too fast during the recovery of the past few weeks.

“Before coming to a real stable recovery, I think you have to see the financial start to recover a little, and we don’t see it yet. “

This report from The Canadian Press was first published on April 20, 2020.

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