Canada February commodity prices down 0.9% from January

28 March 2013 16:12  [Source: ICIS news]

TORONTO (ICIS)--Canadian commodity prices fell slightly in February, mainly because of a holiday season in China, as well as market risk aversion in the wake of Cyprus’ financial troubles, a bank said on Thursday.

Toronto-based Scotiabank said that its monthly Canadian commodity price index was down 0.9% in February from January - led by a 3.0% decline in prices for Canadian oil and gas.

While commodity prices generally moved higher in the opening weeks of February, they eased back after China's Lunar New Year holiday, alongside mixed economic indicators from China and another bout of risk aversion related to financial developments in Cyprus, said Patricia Mohr, Scotiabank's vice president of economics.

As for Canadian oil prices, Mohr said that while international oil prices strengthened in February, the discounts on western Canadian heavy oil to West Texas Intermediate (WTI) widened to “an enormous $36.94/bbl.”

The discounts are the result of inadequate pipeline export capacity at a time of record Canadian oil production and an over-reliance on one key export market - US Midwest refineries, Mohr said.

In the short-term, the discounts should shrink somewhat in March and April as US Midwest refineries return from seasonal maintenance, Mohr said. At the same time, maintenance work at Alberta oil sands operations would take off pressure from the export pipelines, she said.

The discounts, along with the rising US domestic oil production from the North Dakota Bakken and liquids-rich shales in Texas, again underline the need for Canada to diversify its oil exports to China and the Pacific Rim, Mohr added.

($1 = €0.78)

By: Stefan Baumgarten
+1 713 525 2653

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