TORONTO, ON - April 29, 2014 /CNW - After a strong start to 2014, Scotiabank's Commodity Price Index slipped by 1.6% month-over-month (m/m) in March, but stayed 2.3% above a year earlier. The Oil & Gas Index led the decline (-5.5% m/m) -- after surging in January and February -- but remained 25.1% above a year ago. The report also features recent trends in international LNG pricing (liquefied natural gas) and the impact on proposed LNG projects in B.C.

"While LNG has been a lucrative trade, in recent years Asian buyers have been pressing to shift away from 'Oil-Indexed Contracts' -- preferred by B.C. project proponents -- to cheaper 'Henry Hub-based pricing', given low natural gas prices in the U.S.," said Patricia Mohr, Scotiabank's Vice President of Economics and Commodity Market Specialist. "This poses a challenge for B.C.'s 'greenfield' projects, which must compete with low-cost 'brownfield' developments on the U.S. Gulf (e.g. Sabine Pass) and in the Middle East (Qatar)."

Highlights in the report include:

• Market anxiety over Russian-Ukraine tensions and supply outages in Libya has recently supported international oil prices, with Brent at US$109. Russia is among the world's top three oil producers, with output of 10.74 million barrels/day (mb/d) as of March 2014, second only to the U.S. at 11.33 mb/d; Saudi Arabia produced 9.57 mb/d in March, though its maximum capability is 12.4 mb/d.
• Despite the recent impact of unfavourable weather on building activity, we believe the multiple-year recovery in U.S. housing starts will remain intact, lifting lumber prices to quite lucrative levels in 2014-15. 
• Copper prices dropped as low as US$2.92 in mid-March, but rallied back to US$3.08 in late April. China's State Reserve Bureau has bought at least 300,000 tonnes of refined copper from bonded warehouses in Shanghai, likely believing that copper is approaching a cyclical bottom. 

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

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For more information please contact:
Patricia Mohr
Scotiabank Economics
(416) 866-4210
patricia.mohr@scotiabank.com

Devinder Lamsar
Scotiabank Media Communications
(416) 933-1171
devinder.lamsar@scotiabank.com