SOURCE: Scotiabank


November 28, 2014 08:00 ET

Commodity Prices Decline in October: Scotiabank

TORONTO, ON--(Marketwired - November 28, 2014) - Scotiabank's Commodity Price Index lost further ground in October (-2.0% month-over-month), tumbling below the previous near-term low in December 2013.

"After rallying in 2014:Q1 -- on hopes for stronger global growth -- resource prices lost significant momentum in the Fall alongside downward revisions to international GDP growth (especially in the euro zone and Japan) and ongoing jitters over China," said Patricia Mohr, Vice President of Economics and Commodity Market Specialist at Scotiabank. "Huge gains in 'light, tight' oil production in the U.S. shales (up 1.15 million barrels per day over the past year) in an environment of sub-par gains in global consumption (up a mere 600,000 b/d) have essentially destabilized international oil markets."

"The decision of Saudi Arabia and the Gulf Co-Operation Council members (Kuwait, the UAE and Qatar) -- at the November 27 OPEC meeting -- not to cut production to tighten market conditions spells a period of low oil prices -- at least for the coming year, and possibly medium-term. Saudi Arabia appears content with low prices to slow U.S. shale development. 

Other highlights from the report include:

  • Heavy crude is Canada's 'strong card', particularly in a low oil price environment. Demand for heavy oil (a cheaper feedstock) remains strong in the U.S. and Western Canadian oil producers are generally cost competitive. Nevertheless, with West Texas Intermediate (WTI) oil prices likely to trade around US$70 in December, profitability for all but the lowest-cost Steam Assisted Gravity Drainage (SAGD) bitumen producers will be squeezed, with Western Canadian Select (WCS) heavy prices at US$54 (US$70 less a US$16 discount). 
  • On a more positive note, Canadian natural gas export prices edged up in October to about US$3.89 per million BTU (mmbtu) and will advance further in December. New York Mercantile Exchange (NYMEX) natural gas is currently trading at US$4.24 (above US$3.64 a year ago), lifted by fairly cold weather at the start of the North American heating season and lower U.S. gas-in-storage.

Read the full Scotiabank Commodity Price Index online at:,,3112,00.html.

Scotiabank provides clients with in-depth research into the factors shaping the outlook for Canada and the global economy, including macroeconomic developments, currency and capital market trends, commodity and industry performance, as well as monetary, fiscal and public policy issues.

Scotiabank is a leading financial services provider in over 55 countries and Canada's most international bank. Through our team of more than 86,000 employees, Scotiabank and its affiliates offer a broad range of products and services, including personal and commercial banking, wealth management, corporate and investment banking to over 21 million customers. With assets of $792 billion (as at July 31, 2014), Scotiabank trades on the Toronto (TSX: BNS) and New York (NYSE: BNS) Exchanges. Scotiabank distributes the Bank's media releases using Marketwired. For more information please visit

Contact Information