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 ( WTI ) 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
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