Canadian dollar shoots higher as oil rebounds

CBC News, Oct 9, 2015 - Loonie's strongest showing since mid-August

The Canadian dollar shot above 77 cents US today on strengthening oil prices and a weaker greenback.

The loonie rose half a cent to 77.38 cents US in the afternoon, its strongest showing since mid-August.

Oil continued its climb on confidence that U.S. shale drillers are cutting back on production. A report earlier this week by the U.S. Energy Information Agency forecast lower global oil production and an increase in demand.

West Texas Intermediate crude, the main North American contract, rose 41 cents to $49.83 US a barrel. It moved as high as $50.92 in morning trading.

Oil has been rising since Oct. 2, in part on news of Russian airstrikes in Syria and Iran.

Brent, the main international contract, was at $52.94 and Canadian crude contract Western Canada Select was up 11 cents at $34.54

"One development that is significant is what's happening in the Middle East with Russia starting military operations there," said Robert Mark of MacDougall, MacDougall & McTier,

He says the rebound in oil prices at this time of year is a positive as energy prices tend to weaken in autumn. MacDougall, MacDougall & MacTier is predicting oil will settle at or above the $50 market in the next few weeks, but won't hit $70 until the second half of 2016.

"The next big hurdle in terms of analyzing supply and demand is the impact of Iran returning to the market. We're not going to know that until early next year," Mark told CBC News.

Rising energy and commodity prices initially boosted the TSX, but it was down 17 points in the afternoon to 13,960.

Part of the optimism in oil and stock trading is based on the Federal Reserve minutes released yesterday, which seemed to indicate the U.S. central bank would wait to raise rates until the impact of China's economic slowdown is more fully known.

That helped push down the U.S. dollar, which has become stronger on anticipation that rates would soon rise.

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