A man walks past storage area for oil barrels in Shanghai.ALY SONG
You wouldn't know the world is facing big economic uncertainty from the performance of crude oil and energy stocks on Thursday. Oil in New York rose to $94.14 (U.S.) a barrel, up $1.63 in afternoon trading. That puts it at its highest level since early August.
To be sure, there was some upbeat economic news on Thursday that may be driving some of the gains. U.S. jobless claims fell below the 400,000 threshold, slightly better than what economists had been expecting. At the same time, the European Central Bank cut its key interest rate by a quarter of a percentage point, feeding hopes that the central bank is getting more serious about stimulating the slumbering euro zone economy.
But longer-term concerns hang over the market, and oil prices seem to be laughing them off for now. Despite moves by the ECB, Europe's economy could be sliding into recession. And there are growing concerns about China's economic performance as well, with a recent note from Nomura analysts arguing that the chances of a hard landing there are now one-in-three.
The share prices of energy stocks are on side with optimists and oil, though. Energy stocks within the S&P/TSX composite index surged 3.3 per cent on Thursday after investors welcomed quarterly reports from key companies within the sector.
Suncor Energy Inc. rose 4.5 per cent after reporting third quarter earnings of $1.3-billion, or 82 cents a share, up from 78 cents a share last year. Operating earnings, which take into account one-time adjustments, nearly tripled.
Canadian Natural Resources Ltd. rose 9.1 per cent after its operating earnings rose to $719-million, or 65 cents a share, up from 52 cents a share last year and sailing past analysts' expectations.
David Berman