Canadian stocks down as Alberta wildfire weighs on oil production

GMT 22:38 2016 Monday ,09 May

Arab Today, arab today Canadian stocks down as Alberta wildfire weighs on oil production

The Toronto Stock Exchange
Toronto - XINHUA

Canada's main stock market in Toronto kicked start the week down sharply Monday as the huge wildfire raging in the country's oil sands heartland raised uncertainties in oil production and on economic impact.

The Toronto Stock Exchange's benchmark Standard & Poor's/TSX Composite Index lost 137.63 point, or 1.00 percent, to close at 13,563.84 points. All of the TSX index's eight main sub-sectors were lower.

Oil prices dropped Monday as concerns ebbed that massive wildfire could disrupt Canada oil production. The West Texas Intermediate for June delivery moved down 1.22 U.S. dollars to settle at 43.44 dollars a barrel, while Brent crude for July delivery decreased 1.74 dollars to close at 43.63 dollars a barrel.

As lower commodity prices weighed on energy and mining issues, TSX index fell to a three-week low. Metals & mining sector became the biggest drag with a decline of 10.62 percent.

The most influential movers on the index included Teck Resources which tumbled 11.46 percent to 11.98 Canadian dollars (9.24 U.S. dollars), and First Quantum Minerals Ltd., which plunged 14.29 percent to 7.98 Canadian dollars.

Among gold players, Barrick Gold Corporation was down 5.50 percent to 22.52 Canadian dollars, Kinross Gold Corporation lost 6.38 percent to 6.75 Canadian dollars, while Yamana Gold Inc. shed 7.25 percent to 5.63 Canadian dollars.

Spot gold fell, while copper hit its lowest point in nearly a month as weak trade data from top consumer China highlighted poor demand growth prospects and the dollar rose after a Fed official kept rate hike expectations intact.

Suncor Energy Inc., which cut production last week due to the wildfire, fell 1.77 percent to 33.24 Canadian dollars.

Financials fell, including a 0.36 percent drop in the shares of Toronto-Dominion Bank to 55.35 Canadian dollars.

Valeant Pharmaceuticals International said it expected to file its first-quarter report with U.S. and Canadian regulators on or before June 10, ahead of a July 31 deadline, and reiterated its first-quarter forecasts. Its shares edged down 5.24 percent to 36.56 Canadian dollars.

In Alberta, wildfires have led to cuts equivalent to about 40 percent of oil sands production from the region, based on IHS Energy estimates. The impact of a reduction in output is expected to be muted due to U.S. crude stockpiles holding at the highest level since 1929.

Alberta's oil sands have been spared a direct hit from the devastating wildfire that forced the shutdown of more than one million barrels a day of production, but it remains unclear when companies can restart operations.

Once fires in Alberta are under control, Morgan Stanley however opined the majority of oil sands mining projects can be back to normal production levels in about one week.

When Cenovus Energy Inc. and Canadian Natural Resources Ltd. were forced to shut down last year due to wildfires, it took more two weeks for them to resume operations once the area was declared safe, noted Jackie Forrest, a Calgary-based energy economist with Arc Financial Corp.

Forrest expects production costs to rise as operators have to turn to service companies and suppliers beyond the Fort McMurray area until the city is resettled. She said the province will also be eager to see production resume to generate economic activity in a province that was hurting financially before the crisis and now faces massive rebuilding costs.

On the national economic slate, there was disappointment too as housing starts fell by more than expected in April from a month earlier.

Canada Mortgage and Housing Corporation reported that housing starts fell to 191,512 units in April from a downwardly-revised 202,375 units in March. Forecasters had expected 195,000 starts.

The Canadian dollar traded lower at 0.7714 U.S. dollar, compared with Friday's closing rate of 0.7741 U.S. dollar.

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