TORONTO – Oil prices fell below US$30 a barrel Tuesday for the first time in nearly two weeks as North American markets posted steep losses and the Canadian dollar lost half a U.S. cent.
The March contract for benchmark U.S. crude fell US$1.74 to US$29.88 a barrel. Crude has lost nearly US$4 over two days, roiling markets worldwide.
“Everything is correlated to oil these days,” said Michael Greenberg, portfolio manager at Franklin Templeton Solutions. “Markets that shouldn’t be correlated to oil are correlated to oil.”
The Toronto Stock Exchange’s S&P/TSX index fell 232.11 points to 12,442.26, adding to a weak start to the month’s trading. It has lost nearly 380 points over the first two days of February, a decline of close to three per cent.
New York indexes were also in full retreat, with the Dow Jones industrial average plummeting 295.64 points at 16,153.54, while the S&P 500 fell 36.35 points to 1,903.03 and the Nasdaq lost 103.42 points to 4,516.95.
The renewed downswing in the price of oil also dragged down the loonie, which dropped exactly half a cent to 71.29 cents US.
The slide in oil prices also brought down markets outside North America.
In Europe, Germany’s DAX finished 1.8 per cent lower, while France’s CAC-40 fell 2.5 per cent and Britain’s FTSE 100 lost 2.7 per cent.
In Asia, Tokyo’s Nikkei 225 earlier closed 0.6 per cent lower, South Korea’s Kospi index fell one per cent and Hong Kong’s Hang Seng was off 0.8 per cent. China’s man index, the Shanghai composite, was an outlier, gaining 2.26 per cent.
“It seems, these days, as oil goes, so do broad markets,” Greenberg said.
The price of oil last closed below US$30 a barrel on Jan. 21 when it settled at US$29.53 a barrel. It rallied back, hovering above US$33 late last week.
Those gains were spurred by rumours that Russia and OPEC would co-operate on a co-ordinated cut to production, Greenberg said.
“It’s looking like that’s maybe not as likely,” he said.
Still, Greenberg expects the recent fall in oil prices will diminish production later this year, balancing out the current glut of crude on the market. That will “lead to a more sustainable rally in energy prices,” he said.
As a result, the Canadian dollar could get a lift, he added.
“Potentially the worst is behind us for the decline in the loonie.”
Elsewhere in commodities, March natural gas fell 12.7 cents to US$2.025 per mmBtu, while April gold dropped 80 cents to US$1,127.20 a troy ounce.