TORONTO – Canada’s biggest stock market closed above the 15,000-mark for the first time in more than five months on Monday, as oil prices rallied amid hopes that OPEC will strike an output deal.
The Toronto Stock Exchange’s S&P/TSX composite index climbed 175.84 points, or 1.18 per cent, to 15,039.87, with energy, metals and materials stocks racking up the most gains.
Most of the lift was provided by crude prices as the January crude contract jumped $1.88 at US$48.24 per barrel. The gain helped the Canadian dollar advance more than half a cent, with the loonie ahead 0.55 of a U.S. cent to 74.55 cents US.
The 14-members of the Organization of the Petroleum Exporting Countries are set to meet in Vienna on Nov. 30 to agree to details for a deal that will reduce global oil production, and hopefully, drive up prices. The cartel had settled on preliminary terms at a gathering at the end of September.
In the months since then, speculation over whether the deal will become official have injected volatility into stock markets.
Canadian markets strategist Craig Fehr believes it’s more likely the group will agree to a freeze as opposed to a cut.
“The prospects of higher prices are enticing to Middle Eastern producers, however the prospects of cutting production are far less enticing given the need to continue to increase supply as a way to support government budgets,” said Fehr, who is from Edward Jones in St. Louis.
“We’re seeing exactly that. We’re seeing record high production levels from many oil producers at the same time that we’re advancing discussions around a freeze or a cut. I just think the two are opposed enough that it will be much more difficult to strike a co-ordinated agreement than the headlines might suggest.”
Even if a deal is reached, it may be unlikely that oil prices will reach the levels seen in 2014, when a barrel was just over US$100.
Over the weekend, state media reported that Iran’s oil minister said US$55 a barrel is achievable if both OPEC and non-OPEC members work together, and make more of an effort to bring about a better price.
However, Iran has been increasing its production after its international sanctions lifted in January. It has said it wants to get back up to pre-sanction levels of four million barrels a day.
In New York, all three major U.S. stock markets finished at record levels. The Dow Jones industrial average added 88.76 points to 18,956.69, the Nasdaq composite rose 47.35 points to 5,368.86, and the S&P 500 advanced 16.28 points to 2,198.18.
Other commodities were also positive as December gold rose $1.10 to US$1,209.80 an ounce, December natural gas advanced 11 cents to US$2.95 per mmBTU, and December copper contracts went up five cents at US$2.52 a pound.
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