Wednesday, September 13, 2006
TD Bank article on $55 per barrel crude price prediction
This is the TD article that appeared in the Star, for those that want to read the entire article.
TD predicts commodity price retreat
Sep. 13, 2006. 04:02 PM
The price of oil will ebb to $55 (U.S.) per barrel by year-end and nickel is in for a tumble, economists at Toronto-Dominion Bank (TSX: TD) predicted Wednesday.
And overall commodity prices are likely to pull back nine per cent by the middle of 2007, "weighed down by a correction of almost 25 per cent in base metal prices and a further 25 per cent adjustment to crude oil prices," Derek Burleton and Natasha Apollonova said in a commentary.
"Some upside or relatively modest downside to natural gas, forestry, precious metals and agricultural prices should help to cushion the blow."
TD's commodity price index in U.S. dollars rose 2.5 per cent in August, but "the summer's rally has faded," they wrote.
In the oil market, with an easing of supply worries and an expected slowing of U.S. economic growth to a sluggish annual pace of two to 2.5 per cent, "look for the recent downtrend in the price of crude to continue."
TD's $55-a-barrel (U.S.) year-end target compares with a mid-July peak of $78.40 and Wednesday's price in the $64 range.
In base metals, the price of nickel has nearly doubled this year, up about 35 per cent since June while aluminum, copper and zinc all remain below their levels in May, the TD report notes.
"Despite the fact that the nickel market is expected to remain in a deficit position later this year, we believe that emerging signs of a slowing U.S. and global economy will help to relieve some of the existing supply concerns, pushing the price down by almost 20 per cent during the fourth quarter of 2006 alone," it says.
"Look for a further reduction in prices to a more sustainable level in the first half of 2007."
Later next year, overall commodity prices are projected to rebound by 10 per cent, "supported by a bounce-back in the U.S. economy."
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