Energy powers Canada’s exports
Gary Park
Canada piled up a record trade surplus of C$121.1 billion in the fourth quarter of 2005, helping the Canadian dollar muscle its way to a 14-year high, with energy prices and exports to the United States playing a primary role.
Net energy trade accounted for 80 percent of the surplus over the three months, putting oil, natural gas and electricity ahead of automobiles on the export list.
Warren Lovely, executive director and senior economist at CIBC World Markets, said in a research note that a “super-charged energy trade surplus” lifted Canada to a new high-water trade mark, providing a foundation for the Canadian dollar, which is at its highest point since 1991. CIBC sets bullish oil price However, CIBC, which has set a bullish oil price of US$72 per barrel for 2006, warned that if energy continues to rise it will inject more pain into the hard-hit manufacturing sectors of Ontario and Quebec, offsetting the gains in the oil and gas producing regions of Western Canada.
But some economists believe that slippage in U.S. consumer spending and economic growth could see a retreat in energy prices later this year.
The TD Bank Financial Group is leaning towards oil prices of US$50 per barrel.
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