Canada Oil Stocks Plunge Most in Three Years on OPECEric Lam and Rebecca Penty
Energy companies plunged the most in three years, leading the Canadian index to the biggest decline in three weeks, as the U.S. benchmark for oil slumped below $70 a barrel for the first time since 2010.
Lightstream Resources Ltd. and MEG Energy Corp. dropped at least 14 percent to pace declines after OPEC’s decision not to cut production. Suncor Energy Inc., the nation’s largest oil producer by market value, tumbled the most in more than two years. First Majestic Silver Corp. and Detour Gold Corp. retreated more than 4.1 percent as precious metals prices slid. Air Canada, the nation’s largest airline, soared to a six-year high on lower fuel costs.
The Standard & Poor’s/TSX Composite Index fell 115.97 points, or 0.8 percent, to 14,922.44 at 4 p.m. in Toronto, the biggest decline since Nov. 4. The index is up 9.6 percent this year, the ninth-best performer among developed markets in the world. U.S. markets were closed for Thanksgiving.
“There’s the potential tomorrow for another wave of selling to come in,” said Jennifer Stevenson at GCIC Ltd.’s Dynamic Funds in Calgary, who helps manage C$5.5 billion ($4.85 billion). “It’s tough to deploy things today because when the American investors come back into the market tomorrow and the volume is still very thin, it could go either way.”
Stevenson owns shares of energy producers including Suncor and Canadian Natural Resources Ltd. in Canada, and ConocoPhillips and Anadarko Petroleum Corp. in the U.S. She will consider buying more positions in energy shares after markets return to more stable levels.
“Energy’s falling through the floorboards here,” said John Kinsey, a Toronto-based fund manager at Caldwell Securities Ltd., which manages about C$1 billion. “The real stellar oil names, including Crescent Point, Canadian Natural Resources and Suncor, we own all of them and they’re all being pummeled. We’re not happy campers here.”
Crescent Point Energy Corp. sank 9.7 percent to C$30.70, the largest retreat since December 2008. Suncor lost 5.7 percent to C$36.86, the biggest decline since June 2012, and Canadian Natural dropped 7.1 percent to C$38.45, the most since June 2009.
West Texas Intermediate crude slumped to as low as $67.75 a barrel in electronic trading, the first time the commodity traded below the $70 level since 2010. Brent futures, a global benchmark, slid as much as 8.4 percent in London for a fourth day of declines.
The Organization of Petroleum Exporting Countries will keep its current 30 million barrel per day production target, Ali Al-Naimi, Saudi Arabia’s oil minister, said today after the 12 nations met in Vienna.
“It’s a surprising decision,” Caldwell’s Kinsey said. “When there’s a shock like this that happens to the industry, we will take a step back and wait for the dust to settle.”
Oil tumbled into a bear market earlier this year as the U.S. pumped the most crude in more than three decades, boosted by a boom in fracking, and conflict in the Middle East and Ukraine failed to disrupt supply. Signs of slowing demand also crimped prices.
Raw-materials and energy producers, which account for about a third of the benchmark Canadian equity gauge, were among three of the 10 main industries in the index that fell today, on trading 32 percent below the 30-day average.
All but one of the 69 members of the S&P/TSX Energy Index tumbled as the industry sank 5.1 percent, the most since August 2011. The group posted the lowest close since October 2013, and has retreated 8.5 percent in the past four days.
Athabasca Oil Corp. tumbled 10 percent to C$2.59, extending an all-time low. The shares have slumped 19 percent in four days. Lightstream Resources retreated 21 percent to C$2.59, a record, and Surge Energy Inc. dropped 11 percent to C$5.07, the lowest since June 2013.
First Majestic Silver fell 5.6 percent to C$5.10, lowest since September 2010, and Detour Gold lost 4.1 percent to C$9.49 as raw-materials stocks slipped 1 percent. Gold fell to the lowest level in a week.
Air Canada, the nation’s largest airline, soared 9.2 percent to C$11.16, the highest since January 2008 and WestJet Airlines Ltd. jumped 6.5 percent to C$32.04, the largest advance since July 2013, as industrial shares surged 0.7 percent to an all-time high.
“With falling crude oil prices we believe the result is directionally very positive for both Air Canada and WestJet,” said David Newman, analyst at Cormark Securities Inc., who raised his price targets for both companies.
Catamaran Corp. climbed 2.6 percent to C$58, the highest since September 2013. The pharmacy services company has gained 4.2 percent in two days.