Crude oil prices continue to slide

Export Development Canada provides commodity price update

October 5, 2011
by Purchasing b2b staff

OTTAWA: Export Development Canada, Canada’s export credit agency, has released the Commodity Analyst, its monthly report on activity in the commodity markets relevant to Canadian exporters. The report includes the latest prices, charts, tables and commentaries highlighting recent trends as well as a short-term outlook. Here are some highlights from the report for September.


Crude oil and natural gas prices continued their descent, dragging the energy index down 8.3 percent and reflecting concerns over global recovery. WTI crude oil closed the month at US$79 a barrel, down $9.60 a barrel in August. This reflects a combination of weak consumer and business sentiment as well as ample inventories. Natural gas prices closed the month $0.37/mmbtu lower on the Henry Hub. The slide can be tied to a continuation of strong shale gas drilling output and slight gains in storage volumes. But with cold weather on its way, prices should recover in coming months.


The IMF cut global growth projections for next year down to four percent (previously at 4.5 percent), driven mainly by slowing in the US and EU, and the weaker growth will impact the demand outlook for base metals. In contrast to the volatility seen in the base and precious metals complex over the past several weeks, steel prices have been relatively flat. This in part reflects the absence of the speculative component in the steel market.


The global commodity sell off pushed down most forestry prices in August, although lumber and pulp movement were also affected by demand-side weakness. The ongoing housing market weakness in the US and the rapid decline in wood imports from China have lead to a sharp decline in lumber prices during the month. NBSK prices fell to US$970 per tonne in September, with major producers announcing another US$20 decline slated for October in North America.


Prices were affected by the generalized decline in commodities over the past few weeks but disappointing news in production and inventories from the US prevented them from falling too far. US production of spring wheat was down 11 percent from the August forecast and down 25 percent from 2010, because of extreme wet weather in the key producing states. The exception has been corn prices which fell by a stunning 23 percent in September, the biggest monthly drop in over fifty years, after a report showed larger-than-expected supplies.