Global markets were awash in red ink Wednesday as the ripple effects of the banking crisis in the US spread to Europe and oil prices slid to their lowest levels in more than a year. .Canada was no exception and, in fact, took it on the chin worse than most — including the US..Led by plunging oil prices, the Toronto Stock Exchange fell 315 points or nearly 2% to 19,378 while the Dow Jones in New York fell 278 points to 31,874. Benchmark crude prices lost more than 5% or $3.72 US per barrel to finish at $67.61 while natural gas lost 13 cents to close at $2.44. Predictably — as is the case when markets are down — gold was up more than $20 to finish at $1,931 US an ounce..The TSX oil and gas index fell 4.9%, led by some of the biggest Calgary oil sands players: Suncor (SU:TSX) fell 6.5% or $2.80 to $40.24; Cenovus Energy (CVE:TSX) was down another 6.5% or $1.52 to $21.73; and Canadian Natural Resources was down about 3.5% or $3.46 to $69.77..In fact, almost all sectors of the TSX took a hit with the exception of financials, which were only down a modest 1.8% — an ironic turn of events given almost all the market turmoil stems from the decision of US regulators to seize a pair of regional banks in California and New York on Monday and Tuesday. In a panic reminiscent of the 2008 financial crash, the chaos spread to London and Zurich after shares in Swiss banking giant Credit Suisse plunged more than 25% overnight and had to be halted several times during the trading day..Canadian officials, including Finance Minister Chrystia Freeland, took pains to assure investors and everyday depositors the Big Six Canadian banks remain sound and their money remains safe, even after US President Joe Biden did the same for Americans Monday morning. .Changes to US banking laws seem to be a certainty after he assured Americans the executives of the failed Silicon Valley Bank have been fired and that taxpayer dollars won’t be used to bail them out..“That’s how capitalism works,” he said..But it remains a longer term issue..On this side of the border, Canadian banking regulators on Wednesday moved to take permanent control of SBV’s Canadian assets, which amounted to less than $500 million..More troubling from an Alberta perspective was the sudden crash in oil prices, which were fuelled by lingering inflation fears and the health of the global economy. .Western Canadian Select — a blend of bitumen, synthetic and heavy oils that typically trades at a substantial discount to US benchmark West Texas Intermediate (WTI) — was down $3.47 US or almost 7% to just a little north of $50 a barrel. Benchmark WTI has lost about $10 in the last three days, dragging WCS down with it. The losses were offset by the lower Canadian dollar which helped shield prices in absolute terms..Fears were exacerbated by an unexpected stock build south of the border, the US government’s continuing release of barrels from the Strategic Petroleum Reserve and continuing uncertainty over Chinese demand as it recovers from the COVID-19 pandemic. Earlier this week Saudi officials said they expect oil demand growth to exceed 1.5 million bpd this year. Although some investment houses expect oil prices to rebound back above $100 by the end of the year, others are predicting they could fall as low as $45 in the short term..Given 70% of the government of Alberta’s oil revenues are priced off WCS, every dollar up or down is worth more than $200 million to the provincial treasury. In its provincial budget earlier this month, the province said it's counting on US oil prices of $79 per barrel to post a modest surplus.
Global markets were awash in red ink Wednesday as the ripple effects of the banking crisis in the US spread to Europe and oil prices slid to their lowest levels in more than a year. .Canada was no exception and, in fact, took it on the chin worse than most — including the US..Led by plunging oil prices, the Toronto Stock Exchange fell 315 points or nearly 2% to 19,378 while the Dow Jones in New York fell 278 points to 31,874. Benchmark crude prices lost more than 5% or $3.72 US per barrel to finish at $67.61 while natural gas lost 13 cents to close at $2.44. Predictably — as is the case when markets are down — gold was up more than $20 to finish at $1,931 US an ounce..The TSX oil and gas index fell 4.9%, led by some of the biggest Calgary oil sands players: Suncor (SU:TSX) fell 6.5% or $2.80 to $40.24; Cenovus Energy (CVE:TSX) was down another 6.5% or $1.52 to $21.73; and Canadian Natural Resources was down about 3.5% or $3.46 to $69.77..In fact, almost all sectors of the TSX took a hit with the exception of financials, which were only down a modest 1.8% — an ironic turn of events given almost all the market turmoil stems from the decision of US regulators to seize a pair of regional banks in California and New York on Monday and Tuesday. In a panic reminiscent of the 2008 financial crash, the chaos spread to London and Zurich after shares in Swiss banking giant Credit Suisse plunged more than 25% overnight and had to be halted several times during the trading day..Canadian officials, including Finance Minister Chrystia Freeland, took pains to assure investors and everyday depositors the Big Six Canadian banks remain sound and their money remains safe, even after US President Joe Biden did the same for Americans Monday morning. .Changes to US banking laws seem to be a certainty after he assured Americans the executives of the failed Silicon Valley Bank have been fired and that taxpayer dollars won’t be used to bail them out..“That’s how capitalism works,” he said..But it remains a longer term issue..On this side of the border, Canadian banking regulators on Wednesday moved to take permanent control of SBV’s Canadian assets, which amounted to less than $500 million..More troubling from an Alberta perspective was the sudden crash in oil prices, which were fuelled by lingering inflation fears and the health of the global economy. .Western Canadian Select — a blend of bitumen, synthetic and heavy oils that typically trades at a substantial discount to US benchmark West Texas Intermediate (WTI) — was down $3.47 US or almost 7% to just a little north of $50 a barrel. Benchmark WTI has lost about $10 in the last three days, dragging WCS down with it. The losses were offset by the lower Canadian dollar which helped shield prices in absolute terms..Fears were exacerbated by an unexpected stock build south of the border, the US government’s continuing release of barrels from the Strategic Petroleum Reserve and continuing uncertainty over Chinese demand as it recovers from the COVID-19 pandemic. Earlier this week Saudi officials said they expect oil demand growth to exceed 1.5 million bpd this year. Although some investment houses expect oil prices to rebound back above $100 by the end of the year, others are predicting they could fall as low as $45 in the short term..Given 70% of the government of Alberta’s oil revenues are priced off WCS, every dollar up or down is worth more than $200 million to the provincial treasury. In its provincial budget earlier this month, the province said it's counting on US oil prices of $79 per barrel to post a modest surplus.
