After two months of strong gains, Scotiabank's Commodity Price
Index edged down in October by 0.2% month over month. Risk aversion
returned mid-month, alongside another bout of concern over the
outlook for global growth. The All Items Index currently stands
14.1% below the near-term peak in April 2011 - just prior to the
advent of financial market concern over excessive Eurozone
sovereign debt - and has fallen by 5.2% this year.
"Oil and gas prices rose across the board in October, with
firmer natural gas and propane prices in Edmonton and Sarnia, as
well as slight gains in light and heavy crude oil in Alberta," said
Patricia Mohr, Vice President, Economics and Commodity Market
Specialist at Scotiabank.
While still low, natural gas export prices to the U.S. market
jumped from US$2.52 per thousand cubic feet (Mcf) in September to
an estimated US$2.94 in October, after touching bottom at an
exceptionally weak US$2.06 last April. Expectations of a return to
normal winter temperatures across the U.S. and Canada - after an
abnormally warm winter last year - boosted prices, despite record
high U.S. gas-in-storage (3,908 billion cubic feet going into the
heating season in November).
International oil prices, as measured by Brent, rose as high as
US$115 per barrel mid-month, before losing ground to US$110 in
mid-November. Light oil prices in Edmonton also inched ahead to
US$93.14 per barrel last month and Western Canadian Select (WCS)
heavy oil to US$79.86, with the discount on WCS relative to West
Texas Intermediate (
) oil narrowing seasonally to only US$9.71.
"In addition to proposed export pipeline development to the B.C.
Coast, the reversal of Enbridge's Line 9 from Ontario to Montreal
will provide another welcome market for Western Canada's oil,
helping to narrow the large current discounts on WCS heavy oil (and
even on light crudes) off WTI oil," said Ms. Mohr