Oil plunges 8% to $48, Canadian dollar back below 80 cents US

A four-day rally in oil prices appears to be over for now as the price of crude slumped back below the $50-a-barrel level — and dragged the Canadian dollar lower along with it.

The price of a barrel of the benchmark North American oil known as WTI lost $4.60, or 8.7 per cent, to settle Wednesday at $48.45 US a barrel in New York. That drop came after a four-day stretch dating back to late last week when oil had run from $44 to more than $52, a gain of about 18 per cent.

But that appears to be over — at least for now — as traders focused on the long term again, where the economics still point to huge oversupply in the market.

A report out of Washington from the Energy Information Administration (EIA) on Wednesday sparked the decline as it said U.S. crude inventories jumped by six million barrels last week to 413 million, more than analysts had forecast and the highest level on record dating back to 1982.

"If the market was looking for something to try and extend the four-day rally, it was certainly not" in the EIA data, said Sal Umek, senior associate at the Energy Management Institute in New York.

The sell-off in oil was enough to let the wind out of the loonie's sails, as the Canadian dollar lost more than a penny to trade at 79.59 cents US.

The oil-heavy TSX fared little better, shedding 66  points to close at 14,995.65.

Next to energy which fell four per cent, the biggest TSX decliner was the base metals sector, which advanced over the last few days on a run-up in copper prices. The sector gave back almost three per cent as March copper added a penny at $2.59 US a pound.

The gold sector was the leading advancer, up two per cent as April bullion climbed $2 to $1,262.30 US an ounce.