TORONTO _ The Canadian dollar was slightly lower Wednesday as oil prices fell amid a weaker demand forecast from the OPEC cartel.
The loonie was down 0.07 of a cent to 87.34 cents US as traders also looked to the mid-morning release of the Bank of Canada's Financial System Review.
``The Canadian dollar is likely to prove sensitive to the release and the press conference, considering the Bank of Canada's recent increase in language surrounding the financial stability risks in Canada,'' said Camilla Sutton, Chief FX Strategist, Managing Director Scotiabank Global Banking and Markets.
Sutton noted that the most recent FSR in June listed four key risks, including a sharp correction in housing, a sharp increase in long-term interest rates, stress emanating from China and other emerging markets, and financial stress from the euro area.
Meanwhile, OPEC forecast that demand for its oil would drop to 28.9 million barrels a day next year, compared with 29.4 million barrels a day in 2014, the weakest amount in 12 years. The lower demand comes as supplies increase, especially in the United States and OPEC's decision last month to leave production levels unchanged.
Oil has plunged about 35 per cent from mid-summer highs while markets work out a huge imbalance between supply and demand. On Wednesday, the January crude contract on the New York Mercantile Exchange dropped $1.30 to US$62.52 a barrel.
Meanwhile, Iran's President Hassan Rouhani says the sharp fall in oil prices is the result of ``treachery,'' in an apparent reference to regional rival Saudi Arabia, which opposed production cuts to lift prices.
Elsewhere on commodity markets, metal prices declined with February gold down $1.40 to US$1,230.60 after traders looking for a safe haven pushed gold up $37 on Tuesday.
March copper gave back most of Tuesday's four cent gain, down two cents to US$2.91 a pound.