Oil price climbed to a four-month high with the November crude contract gaining 61 cents
TORONTO—A barrel of oil has closed above US$50 for the first time since June, while North American stock markets ended October 6 fairly flat ahead of the release of the latest round of U.S. jobs figures.
The price of oil climbed to a four-month high with the November crude contract gaining 61 cents to settle at US$50.44 per barrel. The last time oil prices closed above this level was when it hit US$50.56 on June 9.
Investors are buoyed by continued signs that the Organization of the Petroleum Exporting Countries will go ahead with a deal to cap production, in a bid to put a floor on falling crude prices. The 14-nation cartel surprised markets by reaching an agreement in principle last week during an informal meeting in Algeria.
The group, which includes members from Saudi Arabia to Venezuela, are reported to be meeting again next week in Istanbul. It previously said details of the deal won’t be hammered out until its official meeting in Vienna on Nov. 30.
The oil rally was also being driven by a report earlier this week that showed a significant drawdown on oil stockpiles in the U.S. last week. The markets had been expecting a surplus.
Paul Vaillancourt, an executive vice-president at Fiera Capital, said the agreement is a good sign that OPEC member countries realize that something must be done about the global glut.
“It signals a willingness to talk and negotiate and to agree that maybe curbing production is a good idea,” said Vaillancourt, who heads the private wealth division for the Calgary firm.
“It’s all very positive. It’s more than just psychological. It’s fuelled some share price gains and the price of the commodity.”
Despite the rise in oil prices, the Canadian dollar was lower even though it usually follows oil’s trajectory. The loonie dipped 0.18 of a cent to 75.68 cents US.
On the Toronto Stock Exchange, the S&P/TSX index declined 15.08 points at 14,595.50.
Energy stocks were modestly higher but gold companies were the biggest drag on the exchange, as December bullion contracts fell for a fifth straight session, pulling back $15.60 to US$1,253 an ounce.
New York was mixed with the Dow Jones industrial average down 12.53 points to 18,268.50, the broader S&P 500 composite index up 1.04 points at 2,160.77, and the Nasdaq composite losing 9.17 points to 5,306.85.
Shares in social media firm Twitter Inc. was a heavyweight on Wall Street. Its stock plunged more than 20 per cent, or $4.99, to US$19.87 after reports emerged that some companies initially believed to be interested in buying it, are no longer interested.
Rumours of a potential deal with Alphabet Inc., Google’s parent company, had sent Twitter up 33 per cent in the past 11 trading days.
In economic news, investors are awaiting U.S. jobs figures set for release on Friday for further evidence that the economy is strong enough to support a rate hike from the U.S. Federal Reserve in December.
In other commodities, November natural gas added on a penny at US$3.05 per mmBTU and December copper contracts fell a cent to just under US$2.16 a pound.