Canada Energy Exports Down 7.3 Percent in Value in May

Canada’s exports of energy products plunged 7.3 percent in value May largely due to lower prices but also due to lower petroleum volumes, official data showed Thursday.

The energy sector, along with farm, fishing and intermediate food products, accounted for the biggest impact in the 3.8 percent fall in total exports that month, Statistics Canada said in a press release.

“Since the record reached in June 2022, export values for these products have been generally trending downward”, the government agency said. “Following an increase of 3.6 percent in April 2023, crude oil exports fell 8.3 percent and contributed the most to the decline in exports of energy products in May.”

Shipments of coal declined 14.5 percent, with less metallurgical coal sent to Asian countries.

“The drop [in energy exports] was mainly the result of lower prices and, to a lesser extent, crude oil export volumes”, Statistics Canada said.

There had been reported production disruptions due to wildfires that started raging in the country in May, which have already surpassed annual averages in terms of area burned at 21.88 million acres, according to data from the Canadian Interagency Forest Fire Center as of Friday.

Energy prices decreased 5.9 percent in Canada in May, the fourth consecutive month of decline—leading the one percent month on month fall in the country’s Industrial Product Price Index. Year over year, energy prices tanked 33.2 percent, the agency earlier reported.

“Lower prices for diesel fuel (-8.5 percent) and finished motor gasoline (-2.9 percent) were mainly responsible for the decline in the energy and petroleum products group in May 2023”, Statistics Canada said June 19. “Light fuel oils (-14.5 percent) and jet fuel (-14.5 percent) also posted a monthly decrease in May.

The Brent international spot benchmark averaged $75.47 a barrel May, its lowest since last year, when fuel prices spiked following Russia’s invasion of Ukraine, according to figures from the USA Energy Information Administration (EIA). The West Texas Intermediate global standard stood at $71.58 per barrel on average that month, also its lowest since 2022, the EIA said.

For natural gas, the Henry Hub benchmark averaged $2.15 per million British thermal unit, its lowest since October 2020, based on EIA data.

Statistics Canada said energy prices dipped May mainly due to weaker crude prices, despite production cuts by the Organization of Petroleum Exporting Countries Plus (OPEC+).

Eight countries in the expanded OPEC alliance, including top OPEC producer Saudi Arabia, announced output cuts April. The separate announcements April 2 mean a combined curb of 1.649 million barrels per day from May to December. OPEC+ has already set a collective cut of two million bpd effective November 2022 through December 2023.

Saudi further set a rollback of one million barrels bpd for this month, as reported by the government’s Saudi Press Agency (SPA) June 4 citing an unnamed official source at the Energy Ministry. That cut has been extended to August, the SPA said Monday citing an unnamed source from the ministry.

Russia, also a member of the OPEC+, simultaneously set an output cut of 500,000 bpd for August, as announced on the government’s website.

Lower exports of petroleum dragged down Canada’s trade with the USA in May. Total exports to its neighbor fell 2.9 percent.

“Imports from that country were up 1.3 percent, mainly on higher imports of motor vehicle engines and parts as well as aircraft. As a result, Canada's merchandise trade surplus with the United States narrowed from $8.7 billion in April to $6.7 billion in May, the lowest surplus since May 2021”, Statistics Canada said.

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