The price of a barrel of Canadian oilsands crude oil fell to its lowest level ever on Wednesday, and the Toronto Stock Exchange sold off heavily as a result.
The price of a barrel of Canadian oilsands crude oil fell to its lowest level ever on Wednesday, and the Toronto Stock Exchange sold off heavily as a result.
Western Canadian Select (WCS) was changing hands at one point as low as $7.63 US per barrel, down $4.60 from Tuesday’s level. The U.S. benchmark known as West Texas Intermediate (WTI) also fell to below $22 a barrel, a level it has not hit since 2003.
That was bad news for shares in oil companies, many of which trade on the Toronto Stock Exchange. Selling on the TSX was so heavy that automatic circuit breakers designed to give markets a pause during times of turmoil kicked in. When the decline hit seven per cent, markets were automatically shut down for a breather.
When they reopened the selling continued, with the TSX closing down 963 points or almost eight per cent. The Dow Jones Industrial Average fared almost as bad, closing below the 20,000-point level.
The TSX was mostly dragged down by shares in oil companies, which were themselves responding to a plunge in the price of crude. Oil is being walloped by too much supply in a time of reduced demand because of the coronavirus pandemic.
After more than a year of an uneasy collaboration to limit supply and try to keep prices up, Saudi Arabia and Russia started a