Canada is a producer of the black gold and a major oil exporter to the neighbouring U.S.
As the Canadian dollar has a strong correlation with oil prices, it dropped to its lowest level versus the greenback since March 28th, with the USDCAD pair touching 0.9792.
As the greenback gains strength amid renewed risk aversion, this adds to the Loonie’s depreciation.
Meanwhile, US crude inventories have been on the rise in the past four week. The focus is on Wednesday’s new inventory report. Water levels on the Mississippi river look less threatening and the fear has subsided that Louisiana refineries will be affected, and consequently helping ease oil prices.
Data released today that U.S. housing starts and building permits fell in April and factory output slumped put further pressure on oil prices.
Crude Oil for June delivery reached a low of 95.01 in the US session, at 11am CET.
“With the housing numbers coming in soft and industrial production coming in (near) flat, there is some concern there will be a double dip in the housing slump and on a broader scale for the economy as a whole,” said Rob Kurzatkowski, futures analyst with OptionsXpress in Chicago.
He added, “We’re seeing further liquidation on the precious metals, and that’s offering some outside pressure on the oil market as well.”