Oil sank below $50 US a barrel on Monday, sending the Canadian dollar lower.

West Texas Intermediate crude, the most commonly traded North American contract, was down $1.47 to $49.34 US at the close of trading Monday in reaction to fresh reports of an oversupply of oil.

International contract Brent crude was down $1.32 to $59.90 and Western Canada Select, a contract traded by Canadian oil companies, stood at $36.45 US a barrel.

That helped drive the dollar down 0.19 of a cent to 79.52 US cents at the close of trading.

Fewer rigs out there

The number of oil rigs in operation in the U.S. continues to fall according to a report released Friday by Goldman Sachs. Oil drillers are reacting to the steep declines in oil prices, which have seen WTI crude drop from over $100 a barrel last summer to below $50 a barrel today.

But the amount of oil being pumped in the U.S. is still on the rise, contributing to a worldwide glut at a time when most economies are not growing. The Canadian Energy Research Institute pointed last week to the rise in production of oilsands bitumen, despite problems getting it to market.

Today, the Conference Board of Canada is pointing to the hit Alberta, Saskatchewan and Newfoundland and Labrador will feel from the falling price of oil.

But it says the combination of a lower dollar, strong U.S. economy and low energy prices means better times for Ontario.

“Ontario’s economy is projected to grow by 2.9 per cent this year, bolstered by strong exports and consumer spending — the first year since 2002 in which economic growth in Ontario outpaces the national average of 1.9 per cent,” said associate director Marie-Christine Bernard.

Higher U.S. dollar

Part of the pressure on the loonie is caused by the rising U.S. dollar, which was reacting with optimism to news of a potential Greek deal with its creditors. Greece is scheduled to present a slate of reform proposals to the EU today.

U.S. investors are also looking forward to speech to Congress by Fed chair Janet Yellen and hoping the central bank boss will indicate there are unlikely to be interest rate hikes in the near future.

U.S. markets backed off Friday’s record highs with the Dow falling  23.60 points to 18,116.90 and the S&P 500 index down s 0.64 of a point to 2,109.66.

Canadian stocks moved lower with falling oil prices and commodity prices. The TSX dropped 28.02 points to 15,200.26.

Gold and metals commodity prices were down, putting pressure on mining stocks.

Scotiabank's monthly index of commodity prices has plunged to its lowest since January 2007, with oil taking the biggest drop.

The bank says global economic conditions are better than during the 2008-09 global downturn, but an extended period of sub-par growth has increased competition and pushed down commodity prices.

The financial sector also fell, with investors anticipating earnings releases from the banks later this week.