The S&P/TSX Composite Index lost another 145.93 points to close at 14,246.77, a day after shedding almost 400 points due largely to weakness in energy prices. The loonie sold off again, losing about 0.4 of a cent to 84.50 cents US.
Oil has now lost well over 54 per cent of its value since last summer, when the price of a barrel of oil touched $107. Oil first dipped below $50 per barrel on Monday before recovering, and then capitulating below the line on Tuesday and showing no signs of stopping.
Late in the trading day, the crude contract hit an almost six-year low of $47.56 a barrel before recovering a little to close at $47.99. "Fifty [dollars] is a fairly important level from the standpoint that you're really digging past many, many producers' marginal costs. So I think, psychologically, it's a big number," said Chris King, portfolio manager at Morgan, Meighen and Associates.
Crude is being driven lower because of oversupply, as the U.S. now produces far more oil than it used to because new technology has flooded the market with shale oil. So much oil, in fact, that the world is currently producing about three million more barrels of oil per day than it's using.
Plunging oil prices have been the result, and that's been a bitter pill for Canada's economy in the short term. Growth forecasts are being slashed as oil companies rush to rein in spending and keep their heads above water.
TSX-listed Crescent Point Energy joined those ranks on Tuesday, cutting its spending forecast by 28 per cent for next year while it rides out cheap oil. Larger rivals like Husky and Penn West have previously announced plans to take similar steps.