Global crude prices plunge, dragging down Canadian energy stocks

Fears of a tariff-driven recession have led to a steep drop in the price of crude oil, walloping Canadian energy stocks and stoking worry about the sector's outlook should the weakness persist.

West Texas Intermediate crude, the key U.S. benchmark, dropped as low as $60.45 US per barrel on Friday, recovering some ground by early afternoon to close at a four-year low of $62.62 US.

The energy index on the TSX was down 8.7 per cent when the market closed — on a day when the overall Canadian stock market was off more than four per cent.

Mark Parsons, chief economist at ATB Financial, says if the crude price drop ends up being sustained, oilpatch companies may throttle back some of their spending plans for the year.

But Parsons says those companies are in a much better financial position than they were when oil prices cratered around 2015, and they're also benefiting from a narrower discount on the heavy crude they produce.

This year's Alberta budget is forecasting oil prices at $68 US per barrel, and the provincial government says every $1 US drop in the WTI price during the fiscal year means a $750 million Cdn hit to the provincial treasury.