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A work boot walks on the oil covered floor at the Suncor processing plant at their tar sands operations near Fort McMurray, Alberta, September 17, 2014. A skid in crude prices to a six-year low is fuelling worry that the industry has entered a new phase of its downturn.

Todd Korol/REUTERS

A skid in crude prices to a six-year low is fuelling worry that the industry has entered a new phase of its downturn.

Canadian energy stocks have shed more than 11 per cent of their value in the past month – all but erasing an early-February rally as oil prices stabilized amid reports of declining drilling in the United States.

Investors and energy executives have expressed concern in recent weeks that oil markets could take the next structural step lower due to surging inventories, especially in the United States, in the absence of any signs of a rebound in energy demand in Europe and Asia.

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"It looks like this is it," said Jeremy McCrea, analyst at AltaCorp Capital Inc. "The question is, do we hold at these levels here, or do we bounce back?"

U.S. Benchmark West Texas intermediate crude sank 96 cents (U.S.) to $43.88 a barrel on Monday, as stockpiles keep climbing, even as drillers idle more rigs in major producing regions. The fall follows several weeks in a range around $50.

The Toronto Stock Exchange's energy subindex tumbled early in the session, before rallying late to settle slightly higher on the day.

On Tuesday, Brent  was trading at $53.11, down 33 cents, by 1016 GMT. WTI crude was at $43.11 a barrel, down 77 cents

Still, the group is back at levels of late January, and has lost 37 per cent since the middle of last year.

Among the hardest hit Canadian companies are debt-heavy producers, such as Penn West Petroleum Ltd. and Lightstream Resources Ltd., which face growing struggles to keep balance sheets in check amid dwindling cash flow and troubles attracting anything but bargain-basement prices for assets they need to sell.

Pure oil sands producers, including Canadian Oil Sands Ltd. and MEG Energy Corp., were targets of selling on Monday as crude prices fell to levels not seen since March, 2009.

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The commodity collapse has already forced the industry to slash spending on drilling and other projects, which has triggered thousands of job losses in Alberta and led Premier Jim Prentice to warn that billions of dollars in public spending cuts are in store for the upcoming provincial budget. An even weaker oil-price projection raises the odds of a deeper plunge into deficit.

Mr. McCrea said the oil market has sold off as the International Energy Agency and Organization of the Petroleum Exporting Countries released reports showing little change in bearish supply and demand forecasts. The U.S. Energy Information Administration is due to release its own market outlook shortly.

Despite a fast-falling rig count in shale-oil regions such as the Permian in Texas and Bakken in North Dakota, production has yet to tail off as expected, leading the IEA to call for storage volumes to increase, even through the summer, he said.

Some market forecasters have speculated that the working storage capacity at the massive Cushing, Okla., supply hub could be essentially full as early as mid-April.

"That's what's spooked the market, essentially," Mr. McCrea said.

Crescent Point Energy Corp. sank 3 per cent on Monday – and is down 17 per cent in the past month – after the oil producer confirmed its March dividend. Some investors have questioned the company's plan to maintain the payout amid falling oil prices, though chief executive officer Scott Saxberg has said favourable commodity and currency hedges have allowed it.

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Encana Corp. has lost 19 per cent in the past four weeks, with some of the drop after it raised $1.25-billion in a stock issue, one of several recent offerings in which proceeds are earmarked for debt reduction.

For Canadian energy producers, natural gas prices have been anything but supportive, with Alberta wholesale supply fetching $2.58 (Canadian) per gigajoule on Monday, compared with $4.46 a year ago.

Despite the commodity collapse, however, share prices have not returned to the lows of mid-December, when U.S. crude sold for nearly $60 a barrel. That's raising worries about how low stocks can go.

"Psychologically, it gets people to question whether there should be more downside in the names right now," Raymond James analyst Chris Cox said. "At the very least it makes a lot of investors hesitant to buy at today's price."

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