WTI crude fell 4.47% to $69.94 a barrel in Friday trading, the lowest level since February 27, the day before the Iran war began. The TSX energy sub-index dropped nearly 4% alongside it, with the iShares S&P/TSX Capped Energy Index ETF down 3.89% to $23.95.
The move caps a five-day slide that has taken WTI from $74.00 on Monday to today's close, a decline of more than 5.5% in a single trading week. Tanker traffic through the Strait of Hormuz reached its fastest pace since the war began this week, even after a vessel was struck by an unidentified projectile off the coast of Oman on Wednesday.
Why Energy Is Doing the TSX's Heavy Lifting Today
Suncor, Canadian Natural Resources and Cenovus together make up more than 60% of the energy ETF's holdings, and all three were trading lower Friday as the broader index absorbed the sector's weight. Thursday's close had the composite at 34,850, up 0.3% on the day as financials and mining offset early signs of energy weakness. Friday's session looks set to give back at least part of that gain.
Gold miners, which carried part of the index higher on Thursday, are not providing the same cushion today. Gold itself ticked up 0.22% to $4,036 an ounce in Friday trading even as it remains down roughly 5% on the week, a smaller and less consistent offset than energy's drag.
WTI's five trading-day path this week shows a steady decline from Monday's $74.00 close to Friday's $69.94, the steepest one-week move since the Islamabad Memorandum was signed and tanker traffic through the Strait of Hormuz began accelerating.
Daily closes shown are approximate, reflecting the most recently reported settlement for each session. The dashed reference line marks Monday's starting level for the week.
The Currency and Bond Market Are Reading This Differently
A falling oil price would typically be expected to support the Canadian dollar less than it weakens it through the inflation channel, and that split is visible today. USD/CAD sits near 1.4202, close to its weakest level for the Canadian dollar in roughly a year, a move driven more by this month's hawkish shift at the US Federal Reserve than by anything happening in the oil market specifically.
Government of Canada bond yields have stayed elevated for a similar reason. The 10-year yield closed at 3.36% on Wednesday, only modestly below where it sat before the Fed's June 17 meeting, even as the energy story that was supposed to ease Canadian inflation has moved decisively in the disinflationary direction. Bond markets are pricing the Fed's signal more heavily than Canada's own energy relief, at least for now.
None of today's moves change the broader pattern in place since the Islamabad Memorandum: energy gives back what it gained during the war, financials and gold miners provide a partial offset, and the currency and bond markets take their cues from Washington as much as from the oil market itself.