TORONTO – North American stock markets moved higher Monday as traders shrugged off failed efforts on the weekend by major oil-producing countries to limit production.
The S&P/TSX composite index extended added 82.62 points to 13,719.82, supported by energy and base metals stocks. Despite a weak finish, the resource-heavy index added more than 200 points last week.
Energy companies were positive despite a 58-cent drop in the May contract for benchmark North American crude oil to US$39.78 a barrel. The more heavily traded June contract gave back 52 cents to US$41.19.
Oil weakened after Sunday’s talks in Doha, Qatar, failed to end with a consensus on freezing production to support prices. Major producer Saudi Arabia said it wouldn’t back a deal if Iran, which is trying to ramp up output as international sanctions are lifted, wasn’t involved. Iran did not attend the meeting.
Relations between the two countries have deteriorated in recent months due to several issues, including their conflicting stances on the wars in Syria and Yemen.
Craig Jerusalim, a portfolio manager with CIBC Asset Management, said failure in Doha means some short-term pain for crude but that eventually prices should head higher.
“We should begin to see production continue to roll over in North America because $40 is not profitable for producers to continue to produce at levels that they have been,” Jerusalim said.
“It certainly is not enough to incentivize any growth in production,” he added, noting that it will result in “a natural stabilization of the supply and demand fundamentals.”
OPEC members meet again in June. Oil has fallen in the past two years from above US$100 a barrel to touch 12-year lows under $30 a barrel earlier this year before rebounding in recent weeks.
The impact of the Doha talks were also mitigated by news that oil workers in Kuwait are on strike to protest government cutbacks. The work stoppage has temporarily suspended production in that country.
Meanwhile, the Canadian dollar also gained strength, up 0.24 of a U.S. cent at 78.14 cents US.
Elsewhere in commodities, May natural gas gained four cents to US$1.94 per mmBtu, while May copper added a penny to US$2.16 a pound and June gold added 40 cents to $1,235 a troy ounce.
New York markets also rose, with the Dow Jones industrial average up 106.70 points at 18,004.16, while the broader S&P 500 moved 13.61 points higher to 2,094.34. The Nasdaq composite advanced 21.80 points to 4,960.02.
In corporate news, shares in e-commerce giant Amazon (NASDAQ:AMZN) rose 1.51 per cent after it introduced a stand-alone video streaming service to rival Netflix Inc. (NASDAQ:NFLX). Its stock gained $9.46 to US$635.35.
— With files from The Associated Press.
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