Oil fell below $40 for the first time since August on Wednesday, dragging the Canadian dollar lower.

U.S. data from the Energy Information Administration showed crude stocks in storage at an 80-year high.

West Texas Intermediate, the benchmark North American contract, was trading at $39.65 earlier in the day. But by the close, it was up three cents to $40.70 US on optimism about the U.S. economy after release of the Fed minutes.

Brent, the international contract, was up 64 cents to $44.21 US a barrel.

Falling oil prices helped pull down the loonie, which dropped to 74.93 cents US before closing at 75.11.

Crude inventories in the U.S. have been rising for eight weeks and grew by 252,000 barrels to 487.3 million barrels in the last week, close to their modern-day record of 490.9 million barrels, recorded in April.

The global oversupply of oil continues to worsen, with the prospect of more crude on the market.

Iran announced Tuesday it will export an additional 500,000 barrels of oil a day after sanctions are lifted in 2016 and plans to continue increasing its output. That's on top of the 1.1 million barrels of crude it currently exports.

Looming over the sector is the Paris climate summit, which could result in worldwide efforts to decrease the use of fossil fuels.

In Canada, sustained low oil prices have led to a fresh round of layoffs this fall in the oilpatch and a pullback in capital investment by most businesses.

The Canadian Association of Oilwell Drilling Contractors issued a forecast this morning showing a 58 per cent drop in oilwell drilling in Canada in 2015.

Craig Fehr of Edward Jones says low oil prices may well be the new normal and that means slow growth for the Canadian economy.

"If you look at commodity prices over the last two or three months, they've stabilized a little bit. I don't think oil prices are going back to $80 or $90 any time soon. I think $50, maybe $60, is the new normal we live in," he said in an interview with The Exchange.

He said Edward Jones is predicting growth in the Canadian economy of around one per cent in the coming year because of lack of capital spending by business, especially in the oilpatch.

That's despite a low dollar that is finally starting to result in increased exports.