Scotiabank’s Commodity Price Index lost ground again in January, declining 5.1% month-over-month (m/m), pushed down by financial market volatility and heightened concern over the outlook for China and global growth. The All Items Index has now dropped 26% below the April 2009 bottom during the last recession and is lower than a decade ago.
The Oil & Gas Index once more led commodity prices lower in January (-15.9% m/m & -38.1% yr/yr). As prices approach the bottom of the world cost curve, Saudi Arabia and Russia have agreed to a tentative oil output freeze.
“Today’s battle for oil market share — not only between Saudi Arabia and the U.S. shale producers, but also between Saudi Arabia and Iran/Iraq — has prevented a rebalancing of excessive world supplies despite generally favourable demand prospects,” said Patricia Mohr, Vice President of Economics and Commodity Market Specialist at Scotiabank. “The tentative agreement between Saudi Arabia & Russia (at the urging of Venezuela & Qatar) is a step in the right direction towards steadying world oil prices, though actual production cuts are probably needed.”
Other highlights from the report include:
Read the full Scotiabank Commodity Price Index online at: http://www.scotiabank.com/ca/en/0,,3112,00.html.
Scotiabank is Canada’s international bank and a leading financial services provider in North America, Latin America, the Caribbean and Central America, and parts of Asia. We are dedicated to helping our 23 million customers become better off through a broad range of advice, products and services, including personal and commercial banking, wealth management and private banking, corporate and investment banking, and capital markets. With a team of approximately 90,000 employees and assets of $856 billion (as at October 31, 2015).
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