The repercussions of falling oil prices were felt on the Toronto Stock Exchange’s S&P/TSX composite index, which was down by 117.01 points to 14,465.73, less than an hour before markets were to close.
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Brent crude futures for October delivery rose 31 cents to $42.11 a barrel, a 0.7 percent gain.
In early morning trading, the contract for the NY futures for September delivery fell to $39.90 before having a resurgence to get up to $40.80 U.S. at 10:15 a.m. ET. The short-term recovery faded as soon as higher prices pushed more output of crude and refined products.
The New York futures contract for September delivery settled at $39.51 USA a barrel, down 55 cents from close on August 1.
Oil prices bounced mightily back above $40 a barrel on Wednesday. Since then, traders have become increasingly concerned that demand is not growing fast enough to whittle away near-record inventories of crude oil and petroleum products in the near future.
Despite cheap crude feedstocks thanks to oversupply, refineries do not expect to make much more money going forward. The United States Oil Fund (USO) added 3% in recent trading while the VelocityShares 3x Long Crude Oil exchange-traded note (UWTI) popped 8.5% in recent trading.
The dollar hit a six-week low, propping oil initially, before US stocks fell to a three-week trough, mitigating the rebound.
“Despite demand growth slowing down towards the end of this year or early 2017, we think the current fall in oil prices will exacerbate capex cuts”, Natixis analysts said.
“Oversupply continues to weigh on the market”, said David Lennox, an analyst at Fat Prophets in Sydney.
Official U.S. crude oil data for the week ending July 29 revealed that crude oil refinery inputs averaged approximately 16.852 million barrels a day.
But prices got a reprieve Wednesday after industry group American Petroleum Institute reported that USA crude inventories and gasoline stockpiles have fallen, signs that the excess stock could be easing. “Supply’s already contracting and demand’s still okay”. The contract fell 34 cents, or 0.8 percent, to $41.80 on Tuesday.
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That represent a 16% reduction from last year’s price.
