Canadian dollar below 80 cents as Canada adds to oil glut

The Canadian dollar is again back below 80 cents Friday, with a report showing Canada's contribution to the worldwide oil glut.

The loonie closed at 79.78US cents, down about a quarterof a cent from yesterday.

It moved lower on data about slowing retail sales in December and a worsening picture in the oil sector.

The Canadian Energy Research Institute reported Thursday that Canadian oil output would grow by 3.5 per cent this year, despite lower oil prices.

Canada is contributing to a global glut of oil that has driven prices from the $100 US a barrel level last year to the $50 US level today, the report said.

There have been numerous reports of reduced capital spending in the oilpatch, but output is still rising. It takes a long time to develop new oil projects, particularly oilsands projects and companiesare reluctant to slow current production.

The CERIestimates oil would have to stay at the $30 to $35 a barrel level for at least six months before producers shut down existing wells and mines. Thats because a lower dollar and declining labour costs are making Canadian oil production more viable, itsaid.

Oil prices, stocks down

Oil prices moved lower on Friday, with the West Texas Intermediate contract traded in New York down $1.08 cents to $50.75US a barrel at mid-afternoon. That wipes out gains made over the last week. Brent crude, the most common international contract, was trading at $60.04US a barrel.

Complicating the outlook for oil is a deep freeze throughout much of the eastern U.S., which could push up prices and demand for products such as home heating oil.

A Statistics Canada report released Friday showed December retail sales were down two per cent, with lower gasoline prices accounting for only part of the drop. There were signs that consumers in Alberta and Saskatchewan are holding back on spending as they worried about the impact of lower oil prices.

Investors were also watching the EUs attempts to reach a debt deal with Greece, which resumed at a meeting of eurozone finance ministers today.

The meeting is the third among finance ministers from the 19-nation eurozone in just over a week and could secure Greece's place as user of the euro.

U.S. stocks and the euro bounced higher at a report that the group reacheda dealfor a four-month extension of Greece's bailout.

The Dow closed up 154 points at 18,140, surpassing its last record close of 18,103 set in late December. The S&P 500 index also was in record territory, up 12points at 2104.