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Oil hits highest point since summer 2015 as U.S. stockpiles drop by 5 million barrels

The benchmark North American oil price gained more than three per cent to near $52 US a barrel on Wednesday, as new data showed U.S. crude stockpiles dropped by 5 million barrels last week and the Saudi oil minister hinted that other countries may be willing to join OPEC in cutting production.

West Texas Intermediate for December delivery closed at $51.82 US a barrel in the afternoon, after having earlier set a new 52-week high of $51.93.

Crude was pushed up by two pieces of good news.

At a conference in London, Saudi Arabia’s oil minister, Khalid Al-Falih, said non-OPEC nations are reportedly negotiating with the cartel about working with them to lower the supply and stabilize prices for all. Later in the day, oil got another shot in the arm when data from the U.S. Energy Information Administration showed there were 5.2 million fewer barrels in storage than expected last week.

It was enough to push oil prices up to their highest point since late summer 2015.

“We’ve had a few starts up only to see prices fall, but this time it seems different, the price holding for longer and investors are warming to the sector,” said Rick Meckler, president of LibertyView Capital Management in Jersey City, N.J.

Oil’s surge was good news for the energy-heavy TSX, which gained 88.24 points to close at 14,840.49.

“Better energy prices are seen as a statement that maybe the economy is a little bit stronger,” Meckler said.

Oil wasn’t the only source of strength on the TSX, as Canada’s biggest bank, the Royal Bank of Canada, touched a new all-time high, at $83.93 per share, before finishing at $83.67. At that price, the bank is worth over $124 billion, more than any other company in Canada. 

After spiking in the aftermath of the Bank of Canada’s decision to stand pat on rates, the loonie gave up its gains and ultimately finished at 76.18 cents US, down 0.05 of a cent from Tuesday.

The Dow Jones industrial average, the SP 500 and the Nasdaq all closed higher. European shares also gained ground as the pan-European STOXX 600 index rose 0.3 per cent, following a 1.5 per cent rise on Tuesday.