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Canadian dollar at 82 cents US as oil surges for a 2nd day

04/16/2015 03:14 EDT | Updated 06/30/2015 09:59 EDT
The Canadian dollar soared above 82 cents US and oil resumed its climb after an OPEC report predicted the boom in U.S. oil production will end later this year.

The loonie closed at 82.04 US cents, up by two thirds a cent on Thursday, after a jump of nearly two cents on Wednesday.

The dollar rose on strengthening oil prices. West Texas Intermediate crude, traded in New York, rose to $56.51 US a barrel, up six per cent on the year. It jumped above $57 earlier in the day.

Brent crude, the most common international crude contract, was also at its highest point of the year, at $63.83 US a barrel, up 53 cents today.

Oil has been rising for the past two days as data comes in showing a slowdown in production in U.S. oil fields.

This morning the Organization of Petroleum Exporting Countries issued its predictions for global crude production, saying U.S. oil supplies would grow to about 13.65 million barrels a day in the second quarter of 2015 and then decline in the second half of the year.

Data points to slowdown

OPEC said the fall in oil prices from over $100 last year to less than $50 last month has begun to curb U.S. output, pointing to the decline in the number of oil rigs in production.

Several key energy forecasters have pointed to weakening U.S. output, including the Energy Information Administration which forecast a drop total crude-oil production from seven key U.S. production regions in May.

On Wednesday, the International Energy Agency, also forecast a slowdown later in the year.

Currency trader Rahim Madhavji of Knightsbridge FX said oil's rise and a more optimistic outlook from the Bank of Canada helped push the Canadian dollar higher.

"The flight of the Canadian dollar rests on [Bank of Canada governor Stephen] Poloz's more optimistic view and is fueled by rising oil prices.  A Canadian dollar rally could start if we get more of the same verbage from Poloz and stronger Canadian economic data," he wrote in a note to investors.

OPEC said demand for its own crude would rise slightly to about 29.3 million barrels a day in 2015, forecasting an increase in demand from China and the EU.

But it's currently pumping about 30.2 million barrels in what critics see as an effort to retain its own market share in the face of U.S. production that has doubled since 2008. The report confirmed its output surged by 810,000 barrels a day in March, even as oil prices tanked.

In more news that could lead to less output, a tribal group made up of former Al Qaeda militants took control of a major southern oil terminal in Yemen on Thursday.

The terminal is one of the major hubs for the Hadramout region which exports 120,000 to 140,000 barrels per day of crude.

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