Iraq’s desire to be exempted from an OPEC production cut caused oil prices to dip Monday, pushing the Toronto stock market and the loonie to a lower close.
The oil-sensitive Canadian dollar dropped 0.34 of a U.S. cent to 74.70 cents US. It’s lost 1.48 cents US since last Wednesday’s close.
Meanwhile, the Toronto Stock Exchange’s S&P/TSX composite index fell 16.03 points to 14,923.01.
That’s as the December contract for crude oil shed 33 cents at US$50.52 a barrel.
Craig Fehr, a Canadian markets strategist at Edward Jones in St. Louis, said the slide in crude was driven by comments by Iraq’s oil minister that the country wants to be exempt from an agreement by the Organization of the Petroleum Exporting Countries.
OPEC announced last month that it plans to cut output in an effort to boost prices.
“What we’re seeing is the flip side in the rally in crude prices that has been driven in recent weeks by the potential for an agreement amongst OPEC members to reduce production,” said Fehr.
“Today we’re seeing the opposite … we’re starting to see some cracks in this potential agreement, particularly where Iraq has suggested that they might not want to participate in a production freeze. We’re seeing oil come off of recent highs as a result of that.”
The global gold sector of the TSX was the lead decliner, down 1.9%, while health-care stocks slipped 1.1% and energy was off 0.57%.
South of the border, the Dow Jones industrial average gained 77.32 points at 18,223.03, the Nasdaq composite added 52.43 points at 5,309.83, and the S&P 500 nudged up 10.17 points to 2,151.33.
In economic news, Canadian wholesale trade figures came in ahead of expectations.
Statistics Canada reported that wholesale sales gained 0.8% to $56.8 billion in August, thanks to the miscellaneous and machinery, equipment and supplies subsectors.
Fehr said exports are going to become a “key area” for future growth in the Canadian economy, as debt-laden consumers have begun to tap out.
“For the past several years, growth has really been propped up by consumer spending,” he said.
“The benefits have come from not only a fairly solid housing market but consumer confidence that’s led them to spend, and I think we’re starting to see some slowdown in that, partly because consumer debt is quite high … so to see wholesale trade figures come in today at a reasonably healthy clip is a good sign.”
In commodities, December gold contracts were fetching US$1,263.70 an ounce at the close, down $4.00, while the November natural gas contract lost 16 cents to US$2.83 per mmBTU and December copper was unchanged at US$2.09 a pound.