Canada: rising energy prices distort July’s trade report - NBF

Jocelyn Paquetanalyst at NBF Economics and Strategy explained that Canada’s trade deficit shrank to its lowest level since the recession in July but a big part of that improvement was due to higher export prices, especially in the energy sector. 

Key Quotes:

"Prices for crude oil exports, for instance, surged no less than 9.4%, a development that explains the large gap between the nominal (+7.0%) and real (-2.2%) monthly progression in that segment. In fact, it wasn’t surprising to see crude export volumes fall in the month after a power outage temporarily halted production at a Syncrude plant in Alberta."

"The surge in energy prices is also largely responsible for the recent improvement in terms of trade - the latter currently stand at their highest level in nearly 4 years. Looking ahead though, there seems to be less room for improvement on that front with the stabilization of oil prices following a buoyant first half of 2018. Another eye-catching point in the report was the jump in Canada’s goods trade surplus with the U.S. to its highest level in ten years."

"There again, exports prices may have played a role, but we suspect trade tensions were also partly responsible. Indeed, the fears surrounding the NAFTA renegotiations may have encouraged our southern neighbors to stockpile Canadian goods, just in case…"