Canadian dollar at 73 cents US amid hopes for oil output freeze

Oil jumped by more than five per cent and the Canadian dollar rose above 73 cents US as optimism grew Wednesday about a deal to curb overproduction of crude.

Uncertainty remains over Saudi deal for oil production cap, but investors hopeful

Oil raced higher today on hopes of a deal by international producers to limit output. That helped buoy North American markets and the Canadian dollar. (Todd Korol/Reuters)

Oil jumped by more than five per cent and the Canadian dollar rose above 73 cents US as optimism grew Wednesday about a deal to curb overproduction of crude.

The gains in oil also led to a rally on stock markets, with the TSX rising by 2.5 per cent.

The benchmark North American contract, West Texas Intermediate crude, rose $1.51 to $30.55 US a barrel at the end of the trading day, a 5.2 per cent increase.

Brent was up $2.05 at $34.23 US a barrel. Oil is still trading at levels that make most North American production unviable.

But traders were encouraged by closed-door talks in Tehran by Iran's oil minister with his counterparts from Iraq, Venezuela and Qatar.

The OPEC members appeared to welcome a freeze on output agreed to Tuesday by Saudi Arabia, Russia, Venezuela and Qatar, but conditional on other countries agreeing to similar freezes.

Iran did not agree to keep its output low, as it has only recently been released from sanctions that eroded its share of oil markets worldwide.

Iran wants bigger share

Iran used to export 2.3 million barrels a day, but it has been limited to one million barrels a day since 2011.

"These countries increased their production by four million barrels when Iran was under sanctions," Iran's OPEC envoy Mahdi Asali was quoted as saying by the Shargh daily. "Now it's primarily their responsibility to help restore balance on the market. There is no reason for Iran to do so."

The United Arab Emirates' energy minister also dodged questions from reporters on the freeze proposal.

But international investors maintained their hope that OPEC would pull its fractious members into line and allow production to fall enough that prices could rise.

Oil's rally encouraged both stock markets and the Canadian dollar, which was up almost a full cent at 73 cents US at the close, after rising to 73.17 cents US earlier in the day.

The TSX was ahead 2.5 per cent or 316 points to 12,867. The broad rally was led by energy shares, which were up four per cent. Bombardier also surged after a report that Air Canada would buy 45 of its CSeries jets.

New York's Dow index was up 257 points at 16,453 after data pointed to a recovery in the U.S. manufacturing sector. The broader S&P index rose 31 points to 1926.

U.S. factories cranked out more cars, furniture and food in January. The Federal Reserve said factory output rose 0.5 per cent, the biggest increase since July.

With files from The Canadian Press


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