Scotiabank's Commodity Price Index Drops Back In June

• TransCanada's 'Energy East Pipeline Project' opens up valuable market opportunities for Western Canada's 'oil patch' - both at home & abroad 
• WTI oil prices climb back to world levels in July, lifting prices in Western Canada
• China introduces 'mini-stimulus package' to bolster its economy

TORONTO, July 30, 2013 /CNW/ - After rallying in May, Scotiabank's Commodity Price Index fell by 4.1% month-over-month (m/m) in June - the sharpest decline since late 2012.

"The Index will be underpinned in July by a return to stronger oil prices in Western Canada and the beginning of another upswing in lumber and oriented strandboard (OSB) prices, after a sharp, seasonal inventory correction," said Patricia Mohr, Scotiabank's Vice President of Economics and Commodity Market Specialist. "The All Items Index remains 1.7% above a year earlier, with Oil & Gas up +17.8%, Forest Products +1.5% and Agriculture +0.1%  just offsetting a  -13.6% decline in Metals & Minerals."

Highlights in the report include:

• The advantages of TransCanada's proposed 'Energy East Pipeline Project':  access to less expensive and more secure domestic crude oil, allowing displacement of imports in Quebec and Atlantic Canada; improved financial viability of current refineries as well as the potential for valuable new export outlets for Western Canadian oil - to Europe and, most interestingly, to India.  Refiners in India have shown interest in Alberta bitumen.    
• After trading well below Brent in late 2012 (-US$21.90 per barrel) and early 2013          (-US$18.27), West Texas Intermediate (WTI) oil prices surged to US$108.05 on July 19, reaching virtual parity with Brent - the international benchmark. This points to stronger prices for Western Canadian Select (WCS) heavy and light oil in Western Canada and improved financial results for producers.
• China's State Council announced a 'mini-stimulus package,' scrapping taxes on small businesses, reducing administrative costs for exporting companies and creating new financing vehicles for private-sector railway investment (bonds).

Read the full Scotiabank Commodity Price Index at http://www.scotiabank.com/ca/en/0,,3112,00.html.

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SOURCE: Scotiabank

Patricia Mohr, Scotiabank Economics, [phone], [email protected]; or
Devinder Lamsar, Scotiabank Media Communications, [phone], [email protected].