Canada’s monthly natural-gas export revenues surge by 45%

By GREG QUINN
Bloomberg

Canada’s merchandise trade deficit narrowed in February as prices for exported energy recovered from the previous month.

The deficit of C$984 million ($778 million) followed a January shortfall that was revised to C$1.48 billion from an initial estimate of C$2.45 billion, Statistics Canada said Thursday in Ottawa. Economists surveyed by Bloomberg forecast a C$2 billion deficit for February, based on the median of 17 forecasts.

The report was the second this week signaling the effects of the crash in prices for crude oil, Canada’s top export, aren’t as dramatic as policy makers predicted. Statistics Canada two days ago reported the economy shrank 0.1% in January as increased oil production made up for lower prices.

Canada’s dollar strengthened after the report and traded 0.4% higher to C$1.2567 per US dollar at 10:36 a.m. in Toronto. The currency remains 7.6% weaker so far in 2015.

Energy exports rose 14.9% to C$8.78 billion, including a 45.1% jump for natural gas and a 9.3% rise for crude oil and bitumen. Prices rose 17.5% and volumes fell by 2.3%.

Total exports rose 0.4% to C$43.5 billion in February, following a 1.7% decline in January. The gain was limited by a 15.1% drop in automobiles and parts to C$5.90 billion.

Front-Loaded Damage

Automobile shipments “need to improve if we are going to have the economy picking up in the second half of the year,” said Benjamin Reitzes, a senior economist at BMO Capital Markets in Toronto. “The focus will be on that non-energy side improving because I don’t think there is any expectation of oil prices returning to $100” per barrel, he said.

Bank of Canada Governor Stephen Poloz has said the drop in oil prices to less than $50 late last year caused damage that is “front loaded” in the early part of this year. He also predicts benefits to the economy such as cheaper gasoline for consumers and a weaker currency that aids exports will set in around mid-year.

Imports fell 0.7% to C$44.5 billion, Statistics Canada said.

The volume of exports declined 3.3% and import volumes fell 1.7%, Statistics Canada said. Volume figures adjust for price changes and can be a better indicator of how trade contributes to economic growth.

The surplus with the US widened to C$2.95 billion in February from C$2.24 billion a month earlier. Exports make up about one-third of Canada’s economy, with about 75% of the shipments going to the US.

 

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