Light trails made by passing automobiles are seen as vehicles stand at fuel pumps at a gas station operated by Royal Dutch Shell Plc at dawn in Guildford, U.K., on Monday, Dec. 8, 2014. Brent crude oil for January settlement climbed 67 cents to $66.86 a barrel on the London-based ICE Futures Europe exchange at 12:08 p.m. local time. after having slid $2.88 to $66.19 yesterday, the lowest close since September 2009.Jason Alden/Bloomberg
The Toronto stock market lost more than 200 points in early trading as oil prices fell further after the OPEC cartel cut its forecast for 2015 world oil demand.
The S&P/TSX composite index dropped 235.7 points, or 1.66 per cent, to 13,960.06. The Canadian dollar shed 0.35 of a cent to 87.02 cents (U.S.).
New York indexes were also lower with the Dow Jones industrials down 122.9 points, or 0.69 per cent, to 17,678.28, the Nasdaq declined 19.24 points, or 0.40 per cent, to 4,747.23 while the S&P 500 was down 12.46 points, or 0.60 per cent, to 2,047.36.
OPEC is forecasting that demand for its oil would drop to 28.9 million barrels a day next year, compared with 29.4 million barrels a day in 2014, the weakest amount in 12 years. The cut comes amid rising global supplies, especially from the U.S.
It also followed the decision by OPEC last month to leave production levels unchanged.
Oil has plunged about 35 per cent from mid-summer highs while markets work out a huge imbalance between supply and demand. On Wednesday, the January crude contract on the New York Mercantile Exchange dropped $1.55 to $62.27 a barrel and the TSX energy sector fell 3.2 per cent. The component, which makes up 23 per cent of the TSX, has plunged about 25 per cent so far this year.
Meanwhile, Iran's President Hassan Rouhani says the sharp fall in oil prices is the result of "treachery," in an apparent reference to regional rival Saudi Arabia, which opposed production cuts to lift prices.
The base metals sector lost one per cent while March copper gave back most of Tuesday's four cent gain, down three cents to $2.90 a pound.
The gold sector was flat while February gold moved down $1.90 to $1,230.10 after traders looking for a safe haven pushed gold up $37 on Tuesday.
Weakness was widespread across the TSX with financials down 0.35 per cent and the consumer discretionary group off 0.45 per cent.
There was some positive economic data from China. Inflation in the world's second-largest economy fell further in November as the rise in food prices moderated, giving Chinese leaders room if needed to pump more stimulus into the slowing economy. Consumer prices rose 1.4 per cent over a year earlier, down from October's already low 1.6 per cent increase. Low inflation gives Beijing room to cut interest rates or launch new stimulus spending with less concern about setting off a price spike.
Economic growth fell to a five-year low of 7.3 per cent in the latest quarter. Beijing cut interest rates Nov. 22 in an apparent move to stop the deepening downturn.
On the corporate front, oil giant BP has warned that plans to streamline its business will cost it $1-billion over the next year.
The changes are part of the company's move to downsize and simplify its operations following $43-billion worth of divestments since the 2010 Gulf of Mexico oil spill.