The Canadian dollar plunged to below 87 cents US today in the wake of turmoil in oil and stock markets.

The loonie was trading at a 5½-year low of 86.72 cents US, down 0.39 of a cent.

After oil gained earlier in the day, it sank again in the afternoon, ending the day below $60, its lowest level since 2009. It's had a steep decline in the last two weeks since OPEC decided not to cut back its production of 30 million barrels a day.

West Texas Intermediate crude, the contract traded in New York, was down $1 at the close to $59.95 US a barrel, after falling by more than $2 Wednesday.

Brent crude edged lower, down 65 cents, to $63.59 US. It is down 37 per cent over the last three months.

Discount on Canadian oil

The discount for the Canadian contract, Western Canada Select, has widened in the past six weeks as the extent of the oil glut became evident.

The difference between WCS and the WTI contract, which was as low as $8 earlier this year, is now $17.25 with WCS trading at $42.70. But that gap is less than a year ago, when the discount on Canadian oil was as high as $40.

The boom in U.S. shale oil has led to a glut of oil worldwide and eaten into the biggest market for Canadian oil — the U.S.

WCS should be benefiting from the startup of major new pipelines such as Enbridge Inc.’s 600,000 barrel-a-day Flanagan South conduit to the U.S. Gulf Coast, but the turmoil in markets has companies looking at cutting back.

The misfortunes of oil have been hard on the Canadian currency, which has followed oil prices lower. Canada's economy is dependent on oil and economists believe falling prices will slow 2015 growth.

But investors also have to weigh the impact of cheaper gasoline and heating oil prices, which leave more money in consumers' pockets and could kickstart retail. The transportation sector is getting a boost from lower fuel prices and manufacturing could bounce back on the strength of the U.S. recovery.

U.S. treasury secretary Jacob Lew pointed to the benefits of lower oil prices in a speech in New York.

"Short term we're seeing a U.S. economy that's growing with increasing strength, and lower energy prices are going to be a boost to consumer demand and confidence," he said.

The price decline is "like a tax cut to the economy," he said, praising U.S. oil production as a "great success story."

TSX closes higher

While the loonie dropped, Toronto stocks recovered from Wednesday's steep 343-point slide.

The TSX was up 52 points to 13,905 at the close, after being as much as 270 points higher earlier in the day. Investors sought bargains among beaten-down stocks.

Industrial, tech and financial stocks gained, and even energy producers were up two per cent.

“You’ve got a bounce with the energy stocks after days of gloomy news, though it’s probably more bargain hunting than anything else,” said John Ing, president of Maison Placements Canada. “Our view is we’re still heading for further weakness in energy prices.

Cenovus Energy announced Thursday it is cutting 2015 capital spending to between $2.5 billion and $2.7 billion, down about 15 per cent from 2014 levels. Its shares declined 18 cents to $20.92.

The Dow Jones industrial average also moved higher, up 63 points to 17,596 after a report showing an improvement in retail sales.

U.S. retail sales perked up in November with the start of the holiday shopping season, rising 0.7 per cent, led by online buying and purchases of autos, clothing and electronics. That helped boost New York stocks.