Energy shares rise as oil price falls
Shares of Canadian energy companies jumped Tuesday despite a drop in the price of oil as most of the world's stock markets responded to government moves in North America and Europe to stabilize the financial system.
Energy listings rode a surging Toronto stock market, which rose a daily record 890 points, and managed to hang on to most of their early gains, with Talisman Energy leading the way with a jump of $2.31, or 23 per cent, to $12.12. EnCana Corp. was up $7.30, or 16 per cent, to $50.80, Suncor Energy advanced $2.90, or 11 per cent, to $28.99 and Petro-Canada rose $3.24, or more than 13 per cent, to $26.94.
After a $3.46 US per barrel rise Monday, oil started the day in positive territory but ended the choppy trading session below $79 US a barrel.
Light, sweet crude for November delivery fell $2.56 to settle at $78.63 US on the New York Mercantile Exchange, continuing last week's trend when crude dropped more than $16, or 17 per cent.
Despite the oil price drop, the Canadian dollar gained 1.4 cents to $86.09 US after having been up as much as 2.33 cents during the day.
The price of crude remains a long way from its summer high of $147 US a barrel before the bubble burst.
The run-up began about a year ago as the U.S. dollar plummeted and speculators sold the greenback to buy oil and other commodities.
Energy analyst Steven Shork said a "buying frenzy" was fuelled by the bullish views of Wall Street investment banks like Goldman Sachs, who forecast that oil demand was going to increase and would exceed growth in supply.
But in July, hedge funds and investment banks — battered by the U.S. subprime mortgage mess, falling house prices and tightening credit markets — began to sell their positions in commodities, Shork said.
Goldman Sachs, which was among those predicting oil prices would hit $200 US a barrel, has since cut its year-end forecast to $70 from $115 and lowered its outlook for the end of 2009 to $107 from $125 a barrel to reflect a weak global economy.
With files from the Associated Press
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