Oil price hits 2016 high

The price of crude rallied to its highest level so far this year as investors were pleasantly surprised by the latest figures on oil stockpiles in the United States.

The June contract for benchmark North American oil surged $1.57 to $46.23 US a barrel as the U.S. reported crude stockpiles declined by 3.4 million barrels last week versus an increase predicted by analysts. U.S. oil production also fell and is down six per cent compared with a year ago.

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Some of the drop can be attributed to the curtailment of more than a million barrels a day of production in the Canadian oilsands region due to the wildfire in the Fort McMurray area of Alberta.

The gain in oil helped lift energy companies on the S&P/TSX composite index, but the Toronto market ended the day little changed, up 13.02 points at 13,788.21. It was a bit of a breather from a more than 200-point gain the previous session.

Loonie, commodities higher

Meanwhile, the oil-sensitive Canadian dollar was solidly ahead, rising 0.39 of a U.S. cent to 77.81 cents US.

Elsewhere in commodities, June gold rose $10.70 to $1,275.50 US a troy ounce while June natural gas was up two cents at $2.17 US per mmBtu. July copper added a penny to $2.10 US a pound.

In New York, retail stocks weighed heavily on the U.S. markets as the Dow Jones industrial average plunged 217.23 points to 17,711.12, nearly erasing its 222 point gain on Tuesday.

The broader S&P 500 composite index declined 19.93 points to 2,064.46 while the Nasdaq composite fell 49.19 points to 4,760.69.

Retail concerns

Department store retailer Macy's posted disappointing revenue and slashed its profit forecast as it reported a drop in sales with international tourists shopping less and customers overall spending less. Its shares (NYSE:M) closed down 15.18 per cent or $5.62 at US$31.38.

Roland Chalupka, chief investment officer at Fiduciary Trust Canada, said investors may be reading declines in retail earnings reports as a gauge of poor consumer appetite.

"The overriding concern is that the consumer isn't quite as healthy as some may have predicted," he said.

"If you think about it, there have been job gains in the U.S. quarter after quarter for years now (and) the unemployment rate is very low. ... Those are all good things, but for some reason the U.S. consumer has not pulled out the chequebook like they have in previous cycles."

Chalupka said markets are still looking for a solid reason to take another leg up.

"Right now, with declining sales revenue in the U.S., with economies generally struggling to accelerate, it's very much a mixed picture," he said. "We would expect over the coming months a mildly positive skew to the market but really, we need to see something provide a catalyst for it to go meaningfully higher."