TORONTO – Oil and gas producers weighed heavily on Canada’s main stock index Tuesday as sliding crude prices hit a seven-month low amid concerns about market oversupply.
The Toronto Stock Exchange’s S&P/TSX composite index was down 116.44 points to 15,149.60, with energy sector losses of 2.23 per cent leading decliners.
Cenovus Energy (TSX:CVE) was among the hardest hit, with its shares down 84 cents, or 8.17 per cent, to $9.44. The Calgary-based oil company announced plans to sell between $4 billion and $5 billion of assets, cut up to an additional $1 billion in costs over the next three years and the unexpected retirement of CEO Brian Ferguson.
The price of oil also fell to its lowest level since mid-November after the August crude contract closed 92 cents lower at US$43.51 per barrel.
The commodity has been bouncing between $40 and $55 per barrel for much of the last year, down from more than $110 in the summer of 2013.
OPEC members have banded together to cut production in hopes of limiting supplies, but increased output in non-OPEC countries like the United States has investors questioning how much they can influence prices.
“What’s happening is that U.S. shale gas is going in the other direction. There’s been more supply popping up,” said Sadiq Adatia, chief investment officer of Sun Life Global Investments.
“People are thinking that perhaps if the U.S. starts increasing supply then OPEC and non-OPEC members will turn and say, ‘No, if they’re going to increase supply, we’re going to increase supply too.'”
In New York, the tech-heavy Nasdaq composite index dropped 50.98 points to 6,188.03. The Dow Jones industrial average lost 61.85 points to 21,467.14 and the S&P 500 index shed 16.43 points to 2,437.03.
In other market news, shares of Home Capital Group (TSX:HCG) moved up 63 cents, or 4.26 per cent, to $15.42. The alternative mortgage lender said it is selling $1.2 billion in mortgage assets to KingSett Capital, a private equity firm focused on real estate, in a bid to stabilize itself.
In currencies, the Canadian dollar was trading 0.27 of a cent lower to an average price of 75.37 cents US.
Elsewhere in commodities, the July natural gas contract was up a cent at US$2.91 per mmBTU, August gold was down $3.20 to US$1,243.50 an ounce and July copper was down four cents at US$2.55 a pound.
Follow @DaveHTO on Twitter.