Canada’s main stock index fell to a two-week low on Monday as lower oil prices pressured energy shares, while Bombardier Inc got a boost from an order to buy the company’s CS300 aircraft.
At 11:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 54.43 points, or 0.33 per cent, to 16,021.99, reaching its lowest intraday since May 14.
The decline for the index came as U.S. markets were closed for Memorial Day.
The TSX’s energy group retreated 0.7 per cent, with major oil producer Suncor Energy Inc down 1.3 per cent at $50.11.
Bombardier said it had completed the sale of 30 CS300 aircraft to Latvia’s Air Baltic Corp, valuing the firm order at about $2.9-billion based on the list price. The company’s shares rose 3.4 per cent to $4.52.
Shares of WestJet Airlines rose 2.8 per cent to $20.94. Pilots who fly for the company’s budget carrier Swoop will now be unionized, a concession which resolves a key obstacle in a labor dispute with the airline, a negotiator with the Air Line Pilots Association said.
Pan American Silver Corp shares fell 5.3 per cent to $22.14 after the company initiated steps to reduce certain activities at the Dolores Mine in Mexico.
The overall materials group, which includes precious and base metals miners and fertilizer companies, lost 0.7 per cent.
Nine of the TSX’S index’s 10 main groups were lower. Only health care stocks, led by a 3.1-per-cent jump from, Canopy Growth Corp., were higher.
Oil prices extended losses on Monday as Saudi Arabia and Russia said they may increase supplies while U.S. production gains show no sign of slowing.
Brent crude futures stood at $75.22 a barrel, down $1.22 from the previous close. The contract touched a three-week low of $74.49 earlier in the session.
U.S. crude futures were at $66.49, down $1.39, after hitting a six-week low of $65.80.
The spread between the two contracts reached $9.38 a barrel, its widest since March 2015.
Trading was light due to public holidays in the United States and United Kingdom.
The Organization of the Petroleum Exporting Countries (OPEC) and other producers led by Russia began withholding 1.8 million barrels per day (bpd) of supplies in 2017 to tighten the market and prop up prices that in 2016 fell to their lowest in more than a decade at less than $30 a barrel.
Prices have soared since the start of the cuts last year, with Brent breaking through $80 this month, triggering concerns that high prices could crimp economic growth and stoke inflation.
“The pace of the recent rise in oil prices has sparked a debate among investors on whether this poses downside risks to global growth,” Chetan Ahya, chief economist at U.S. bank Morgan Stanley, wrote in a weekend note.
To address potential supply shortfalls Saudi Arabia, the de facto leader of OPEC, and top producer Russia have been in talks about easing the cuts and raising oil production by 1 million bpd.
Russian Energy Minister Alexander Novak said a return to October 2016 production levels, the baseline for the current supply pact, was one option for easing curbs.
“Given that our crude balance is short some 825,000 bpd over (the second half of the year), a gradual increase of about 1 million bpd would probably limit stock draws to quite some extent,” Vienna-based consultancy JBC Energy said.
Meanwhile, surging U.S. crude production showed no sign of abating as drillers continued to expand their search for new oilfields to exploit.
U.S. energy companies added 15 rigs looking for new oil in the week ending May 25, bringing the rig count to 859, its highest since 2015, in a strong indication that American crude production will continue to rise.
Reuters