Canadian dollar driven down as oil dips back to $51

Oil prices resumed their slide on Thursday as new inventory data confirmed that North American oil producers aren't cutting back production, which may mean the glut isn't going anywhere.

Traders and pumpers are hoarding oil in storage in an attempt to wait out low prices. But with more coming in every day, the balance between supply and demand isn't settling.

"The inventories were the trigger for the sharp correction lower," Carsten Fritsch, an oil analyst at Commerzbank in Frankfurt, said. "The focus is again back on the oversupply — the big question is for how long?" 

North America's oil benchmark, WTI was off by about 87 cents at $51.27 US a barrel in late afternoon, after trading as high as $54 US a barrel two days ago. It dipped below $50 in morning trading.

That was enough to drag the Canadian dollar lower, as the value of the loonie is closely tied to crude prices. The loonie traded below 80 cents most of the day, before finishing at 80.01 US cents.

Things weren't looking much rosier on the oil-heavy TSX, either. Canada's benchmark stock index, the S&P/TSX composite index, was down about 32 points to 15,180.

The Greek debt impasse also worried investors, after Germany rejected Greece's request for a six-month extension of its bailout program.

A major decliner in Toronto was SNC-Lavalin on news that the RCMP has laid fraud and corruption charges against the engineering firm and two of its subsidiaries. The charges follow an investigation into business dealings in Libya, between 2001 and 2011, and allegations that they paid millions of dollars to public officials.