Oil dips below $44 US as loonie extends weakness

Crude oil dipped below $44 US a barrel on Friday, extending a 1½-month decline and bringing it to its lowest level since mid-April.

The benchmark West Texas Intermediate futures contract traded as low as $43.74 US on Friday, down a dollar from Thursday's close, before inching back up to $44.19 by mid-afternoon. It hasn't been below $44 since April 20.

Oil has been on a slide since early June, as global supply disruptions have eased and concerns about consumption mount.

Analysts from a number of major firms — including BNP Paribas, UBS and Société Générale — have said over the last week that they expect the price of crude to fall toward $40 a barrel.

"The oil market has still to absorb higher supply from the return of disrupted production," UBS analyst Giovanni Staunovo told Bloomberg, forecasting a possible drop to $40.

Meanwhile the Canadian dollar, whose value often moves alongside that of oil, shed about half a per cent Friday and was trading at around 76 cents US, putting it in line for a fifth straight day of decreases.

Friday's stable reading on Canadian inflation for the month of June — Statistics Canada reported the annualized rate at 1.5 per cent — means there will be little pressure on the Bank of Canada to hike interest rates anytime soon to tamp down price increases. South of the border, economic analysts are increasingly expecting an earlier rate hike from the U.S. Federal Reserve.

Lower rate expectations for Canada coupled with a higher rate in the United States would tend to drive the loonie down against the American dollar.