TSX ends 172 points higher as oil prices stabilize

The Toronto stock market shot higher today for a second day, as oil prices appeared to stabilize.

The S&P/TSX composite index was up more than 200 points in early trading, and remained ahead 172 points at 14,457 at the close of trading. All sectors were higher, reversing some of the steep sell-off that began 2015.

Oil prices continued stable, largely on data released Wednesday by the U.S. Energy Information Administration that showed U.S. crude inventories were down by 3.1 million barrels last week.

The West Texas Intermediate contract traded in New York rose 31 cents to $48.96 US a barrel. Brent crude was off seven cents to $51.08.

Thursday marked the second day that oil moved in a narrow range around $50, and investors hope it will find a bottom after four months of volatility.

Oil is half the price it was six months ago, and that steep drop has weighed on Canadian stocks.

A halt to the slide in oil prices would be welcome in Alberta, where resource industries are reconsidering their investment plans for 2015 in the face of $50 a barrel oil.

Impact on Alberta

Scott Vali, vice-president and portfolio manager at CIBC Asset Management, said optimism about a rebound in oil prices is fading as futures prices fall and resource companies have been forced to embrace capital cuts. 

"Budgets are going to be cut, drilling is going to be curtailed and you will see that over the next couple of months where the drill count in the U.S. should drop somewhere between 40 and 50 per cent — and that will be the first signal that we are actually seeing the curtailment of new productive capacity in the market," Vali said.

Alberta’s economy has grown at close to four per cent a year for the last five years on demand for crude, but a report from ATB Financial predicts its 2015 growth will be just two per cent.

"In the grand scheme, a lot of places in the world like to see two per cent growth these days,” Todd Hirsch, chief economist with ATB Financial said in an interview with CBC's The Exchange with Amanda Lang.

Alberta's other major industries, forestry, agriculture and tourism, actually benefit from low oil prices, one reason ATB is not foreseeing a recession.

“We’d still like to see more diversity, but there is diversity there and it is because of that diversity and the fact that they benefit from low oil prices that we’re not going to see a recession," he said.

ATB predicts modest job cuts in the province and an unemployment rate as high as six per cent by the end of the year.

Hirsch believes oil prices will bounce higher and will probably average between $55 and $70 for the year.

At a news conference today, Prime Minister Stephen Harper acknowledged the significant impact on oil-producing parts of the country but said the oil industry was “resilient.”

“As rapid and negative change as this is for the industry, the industry in my lifetime has lived through changes this extreme and more on many occasions,” Harper said.

U.S. indexes were also sharply higher. The Dow was up 323 points or 1.8 per cent to 17,907, the S&P 500 rose 36 points to 2062 and the Nasdaq climbed 85 points to 4736.

Investors were reassured by the minutes of the last U.S. Federal Reserve meeting released Wednesday. They showed the Fed expects to raise interest rates in the middle of the year or later.

They are also looking forward to job numbers to be released Friday, which are expected to show an uptick in U.S. employment.