Canada commodity prices fall for fourth straight month in March

26 April 2012 16:47  [Source: ICIS news]

TORONTO (ICIS)--Canadian commodity prices fell for the fourth month in a row in March, dropping 2.9% from February, mainly because of lower prices for western Canadian oil and natural gas, a bank said on Thursday.

Toronto-based Scotiabank said its monthly price index for Canadian commodities fell again in March as higher agricultural and forest products prices could not offset a sharp decline in oil and gas prices.

While international benchmarks - Brent and West Texas Intermediate (WTI) oil prices - continued to climb in March, both Edmonton light sweet and western Canadian heavy crude oil prices fell.

Scotiabank’s commodities specialist Patricia Mohr said that planned pipeline projects to connect Cushing, Oklahoma, to US Gulf coast refining centres would, in coming years, help to narrow the wide price discount for WTI oil to Brent, and therefore lift prices for western Canadian oil.

However, the commercial risk for Canada of relying only on the US as its major export market for oil and gas would remain, particularly in light of the recent decline in US petroleum demand and only slow projected demand ahead, Mohr said.

“There is an urgent need to expand Canada's export pipeline capacity to tap the faster-growing markets of Asia," she added.

As for natural gas, Mohr said that supplies continued to rise in North America, despite low prices, as producers kept going after liquids-rich shale gas.

However, longer-term gas prices would rise again if planned US liquefied natural gas (LNG) export projects are realised, she said. 

Meanwhile, on the demand side the development of compressed natural gas in transportation markets would add upward pressure to gas prices, she added.

By: Stefan Baumgarten
+1 713 525 2653

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