TORONTO – Oil supply concerns prompted by a massive wildfire near Fort McMurray, Alta., and continuing violence in Libya initially sent oil prices higher Thursday, but that rally subsided, leaving North American stock markets barely changed.
The S&P/TSX composite index in Toronto added 0.01 of a point to 13,632.01, with gains in gold and materials stocks offsetting pressure from the metals and financial sectors.
The flat reading provided some relief following what has been a volatile week for the commodity-heavy index, which has wiped out nearly 320 points since Monday.
The TSX was more solidly positive earlier in the day as oil prices rose more than three per cent. But that momentum faded as the June contract for benchmark North American crude retreated to a more modest gain of 54 cents to US$44.32 a barrel.
Several oil companies in Fort McMurray have temporarily shut down or scaled back production as they deal with the growing emergency that has led to 80,000 residents being evacuated from the city. The companies estimate that production in the oilsands will be cut by at least 600,000 barrels a day.
That, along with news of more fighting between factions in eastern and western Libya, a major oil producer, briefly resulted in a big rally for crude prices.
Concerns have been swirling for months over the global oil supply glut, which has kept prices low.
Peggy Bowie, a senior trader with Manulife Asset Management, said any rally would be short-lived because production cuts are temporary.
“As long as you’re going to have big supply, you’re going to have a cap on oil (prices),” she said.
Lower crude prices have also put a squeeze on the Canadian dollar as of late, with the currency sustaining heavy losses against the greenback. The loonie has shed more than two cents in the previous two sessions.
On Thursday, the loonie added 0.01 of a U.S. cent to 77.71 cents US.
Elsewhere in commodities, June natural gas fell seven cents to US$2.08 per mmBtu, while June gold lost $2.10 to US$1,272.30 a troy ounce and July copper shed three cents to US$2.15 a pound.
In New York, markets were flat, with the Dow Jones industrials gaining 9.45 points at 17,660.71, while the broader S&P 500 was off 0.49 points at 2,050.63 and the Nasdaq lost 8.55 points to 4,717.09.
Traders are awaiting the latest barometer of economic health on both sides of the border Friday, with the latest employment figures scheduled for release in Canada and the U.S.
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