Canadian dollar above 75 cents US, as oil moves higher

The loonie rose by almost a penny against the U.S. dollar on Wednesday, as oil resumed its climb and the Bank of Canada kept interest rates unchanged.

Optimism fuelled by hopes of oil output freeze, but signals from producers mixed

Traders are hoping for an agreement from oil producers on freezing output. (Matthew Brown/Associated Press)

The loonie rose by almost a penny against the U.S. dollar on Wednesday, as oil resumed its climb and the Bank of Canada kept interest rates unchanged.

Toronto stocks also resumed their rally today as crude moved higher in anticipation of an output freeze by major producers.

Brent oil, the main international contract, was above $40 US a barrel at $40.87, after falling sharply Tuesday.

West Texas Intermediate, the benchmark North American contract, had risen 4.7 per cent by the close, to $38.29 US a barrel, after a sharp fall Tuesday.

The TSX broke an eight-day winning streak with a down day Tuesday, but on Wednesday at midday it was ahead 88 points, to 13,398.

It is seven years since the big market crash of March 9, 2009. The TSX has risen 77 per cent since that day, when it closed at 7,567. 

In late afternoon, the Canadian dollar was at 75.51 cents US, up .93 of a cent, and just below its peak of the day.

The Bank of Canada's decision to keep its key interest rate unchanged was broadly expected, but it meant a more positive outlook on the Canadian economy from the central bank.

Oil and markets have been rising for more than three weeks on hopes of a return to stability in oil prices until Tuesday's rout.

Meeting details in doubt

The signals are mixed from oil producers around the world on whether there will be a concerted effort to put a floor on oil prices.

An Iraqi oil official told a state newspaper today that there is a plan for members of the Organization of the Petroleum Exporting Countries to meet March 20 in Moscow with non-OPEC producers.

However, Russian Energy Minister Alexander Novak has said through a spokeswoman there is no set place or time for such a meeting.

The hope is that large producers such as Saudi Arabia and Russia are tired of selling their oil at cheap prices, with the corresponding drop in government revenues.

Saudi Arabia, which has had balanced budgets for years, had a deficit equal to 15 per cent of its GDP in 2015 and is looking at another deficit in 2016. It is expected to tap bond markets for $31 billion US in new debt this year.

Smaller OPEC members such as Venezuela are keen for an agreement as low oil prices have played havoc with their economies.

But Iran, which has been subject to an embargo for years, is keen to expand its exports. Its delivery of one million barrels of crude to European shores on Sunday helped depress oil prices on Monday.

Iran's goal is to double its output to two million barrels a day.

Also a positive for oil was data from the U.S. Energy Information Administration that showed crude stockpiles rising in line with expectations, but gasoline stocks falling.

Oil stocks rose by 3.9 million barrels in the previous week to a total of 521.9 million barrels, but total motor gasoline stockpiles dropped by 4.5 million barrels, and distillate fuel stocks also decreased by 1.1 million barrels, an indication the demand is rising..

Markets in Europe closed with gains and New York's Dow industrial average edged up 36 points at 17,000, while the broader S&P rose seven points to 1986.

There is optimism in Europe over the European Central Bank decision on interest rates due Thursday. The European Central Bank is expected to extend or even expand its stimulus program.