Base metals and materials helped Canada's main stock index close higher Thursday, while the Canadian dollar continued to climb along with oil prices.
The spike in oil prices, however, which climbed another 22 cents on the day to close at US$71.36 per barrel, has investors worried about how much the prices are supported by fundamentals.
"The good news for Canadian heavy investors is that oil prices are the highest they've been in recent years," said Kash Pashootan, CEO at First Avenue Investment Counsel Inc.
"The bad news is we don't feel the current price reflects supply and demand fundamentals, but more so, is being driven off of the geopolitical uncertainties that can lead to supply disruptions."
U.S. President Donald Trump's rejection of the Iran nuclear deal has roiled oil markets this week, sending oil over US$70 a barrel for the first time since 2014.
The higher oil prices have only slowly translated to higher valuations for oil and gas companies, showing a skepticism of how long oil prices can stay so elevated, said Pashootan.
"What the market is telling you there, and what the disconnect is telling you, is that the market is not convinced oil prices will stay at these high levels," he said.
"Now the question becomes, is there a $10 risk premium priced in per barrel, or is it $15 or $20? The point is when those geopolitical uncertainties subside, then you will see oil trading back along with supply and demand fundamentals, and that is, to us, easily $10 a barrel less than what we're seeing today."
The S&P/TSX capped energy index was actually flat on the day, despite the gain in oil prices.
Overall, the S&P/TSX composite index closed up 48.69 points at 15,959.50 as dips in technology and utility stocks cut into overall gains for the index.
In New York, the Dow Jones industrial average closed up 196.99 points at 24,739.53. The S&P 500 index ended up 25.28 points at 2,723.07 and the Nasdaq composite index was up 65.06 points at 7,404.97.
The Canadian dollar averaged 78.28 cents US, up 0.50 of a cent from Wednesday, as oil prices also helped push up what is seen by many as a petrocurrency, said Pashootan.
The June gold contract ended up $9.30 at US$1,322.30 an ounce and the July copper contract was up five cents at US$3.11 a pound. The June natural gas contract was up eight cents at US$2.81 per mmBTU.
Canadian Tire Corp. Ltd. saw its stock drop $9.50, or 5.42 per cent, to $165.87 after announcing it was buying Norwegian outdoor clothing and gear maker Helly Hansen from the Ontario Teachers' Pension Plan for $985 million.
Enbridge Inc.'s share price climbed 77 cents or 1.86 per cent to $42.25 after reporting earnings results that beat analyst expectations. The company's share price rose Wednesday as well after announcing more than $3 billion in asset sales.
WestJet Airlines Ltd. saw its share price drop 11 cents or 0.56 per cent after pilots at the airline voted 91 per cent in favour of strike action. Pilots are in a position to start strike action on May 19 but have committed to not disrupting passenger travel plans over the Victoria Day long weekend.