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Cheap Alberta oil is giving economists second thoughts about the next Bank of Canada rate increase. Considered a sure thing only a couple of weeks ago, doubts are beginning to emerge about whether the central bank will hike in January without a rebound in slumping prices for Canadian heavy crude. In reports over the past 24 hours, Toronto-Dominion Bank and Bank of Montreal have put asterisks on their calls for a move, while swaps trading suggests investors are also paring bets. Should weakness persist, “we would expect the Bank of Canada to hold off on raising its policy interest rate until there is further stabilization in oil prices,” Toronto-Dominion Bank economists Omar Abdelrahman and Brian DePratto wrote in a research note Friday. Western Canada Select crude — the main blend sold by the nation’s oilsands — closed at US$13.46 a barrel on Nov. 15, the lowest in Bloomberg data stretching back to 2008. Its discount to U.S. benchmark crude exploded to as much as US$52.40 a barrel last month, also a record. All but one of 14 economists recently surveyed by Bloomberg News expect a rate increase in the first three months of next year. Odds for a hike […]
