North American oil market declines

North American oil market declines

Canadian and U.S. markets underwent a broad-based drop Monday as worries around increasing coronavirus cases and falling oil prices led Canada’s main stock index to drop to its weakest level after May.

An investment strategist, Craig Fehr, with Edward Jones, said building case counts for the Delta variant of the coronavirus are sparking worries that a nascent economic recovery may not be as stable as once suspected.

The S&P/TSX composite index was below 259.09 points at 19,726.45.

In New York, the Dow Jones industrial average was below 725.81 points at 33,962.04. The S&P 500 index moved beneath 68.67 points at 4,258.49, while the Nasdaq composite went below 152.26 points at 14,274.98.

According to Fehr, the energy-heavy TSX was further scored by steep declines in oil prices today, emerging from a recent deal to increase production by the OPEC+ group to increase production.

He stated that demand for the commodity also meets some skepticism. An increase in coronavirus cases could point to reduce gasoline sales.

The September crude oil contract was beneath US$5.21 at US$66.35 per barrel. The August natural gas contract was more distinguished than 10.5 cents at US$3.79 per mmBTU.

The Canadian dollar also took a punch, trading at 78.38 cents U.S. connected with 79.41 cents U.S. on Friday.

New fluctuations on an oil market is ahead

Fehr stated the slump in the loonie was deliberate, in order to the decline in oil prices. It was derived from a “sizeable” decrease in bond yields.

Notwithstanding Monday being a hard day for North American markets, Fehr stated the long-term outlook for this year and 2022 looks encouraging.

Nevertheless, he stated people should be conscious that there will be more fluctuations

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