See oil rise. See oil fall.Crude oil traded at $126.22 (U.S.) a barrel early on Wednesday, down $2.63 - hardly a bargain but a steep 7 per cent drop from its peak last week, when it crested $135 for the first time ever.
One theory for the retreat is that demand destruction is at work: that is, with peak driving season upon North America, the concern is that drivers will balk at the high fuel costs and stay at home and watch television instead.Of course, lower crude oil prices is terrible news for the commodity heavy Canadian benchmark index, which was walloped on Tuesday. It usually sends the Canadian dollar into a funk as well.
But for U.S. markets, especially stocks that are energy dependent (auto manufacturers and airlines) or rely on a strong consumer (retail stocks), the lower prices are seen as a welcome relief.Futures for the Dow Jones industrial average rose 26 points, to 12,579, about an hour before markets open for trading, suggesting the index will rise at the start of the day. Futures for the S&P 500 rose 4 points, to 1388.In Europe, the U.K.'s FTSE 100 rose 0.6 per cent and Germany's DAX index rose 1.2 per cent in afternoon trading.
In Asia, Japan's Nikkei 225 fell 1.3 per cent in overnight trading.In Canada, investors will be keeping a close eye on Toronto-Dominion Bank, the third of the big banks to report second quarter earnings. As well, Sears Canada Inc. reports its first quarter for fiscal 2009.Copyright 2001 The Globe and Mail