Scotiabank’s Commodity Price Index hit a new high in April, the bank said today.

The index, which measures price trends in 32 of Canada’s major exports, posted consecutive record highs in each month so far this year, Scotiabank announced today.

The All Items Index jumped by 5.7% over March and has now advanced 197.2% above the cyclical low in October 2001. As well, the bank noted that the current upswing has outpaced the huge expansion which occurred in the 1970s following the Arab oil embargo.

West Texas Intermediate (WTI) oil prices surged to a new Nymex intraday trading record of US$133.72 per barrel on yesterday, more than double year-earlier levels of US$63.53, notes Patricia Mohr, vice-president, economics and commodity market specialist at Scotiabank.

“Following a detailed analysis of global supply and demand developments, pointing to very tight non-OPEC supplies, we are upwardly revising our WTI oil price forecast to an average of US$125 for 2008, assuming prices of US$140 in the second half of the year, and US$135-140 for 2009,” says Mohr. “Sustained high prices are expected over the balance of the decade.”

“While important, our own analysis indicates that challenges in bringing on stream new oil fields in non-OPEC regions overwhelmingly account for today’s spectacular crude oil prices,” Mohr adds. “Geopolitical supply risks loom large in a world where the oil system is operating near full capability. The interest by hedge funds largely reflects the perception of very tight supplies and resource scarcity and does not represent a bubble. It should be noted that the U.S. dollar has actually steadied since late March and has had only a slight impact in boosting prices from US$100 to today’s US$133.”

Aside from the Alberta oil sands, the report notes, Russia and Kazakhstan are two of the regions thought to offer the greatest potential for expanding world oil supplies. Russia, the world’s second largest oil exporter after Saudi Arabia, had been a bright spot earlier in the decade, with annual production rising 712,000 barrels per day from 2001-04 and 238,000 barrels per day from 2006-07. However, output fell in the first four months of 2008 and is expected to be flat-to-down, at best, this year.

Oil consumption growth in ‘China, other Asia and the Middle East’ at an estimated 950,000 barrels per day will account for the bulk of world demand growth in 2008, with G7 consumption declining by roughly 420,000 barrels per day, centred in the United States, and demand in the rest of the world advancing by 480,000 barrels per day for an overall increase of one million barrels per day. Asian demand growth may turn out even higher, given China’s strong 11% year-over-year growth in apparent consumption in March, met by robust imports of gasoil (diesel) used in agriculture and as a back-up in case of coal-fired or gas-fired electricity shortages.

Government subsidies, intended to reduce inflationary pressures, are shielding consumers in much of emerging Asia and parts of the Middle East and Latin America (Brazil) from extraordinary crude oil prices. As an example, retail gasoline prices in China in mid-May at US$0.77 per litre and in Malaysia at US$0.58 are much lower than US$1.01 for gasoline in the United States and US$1.30 in Canada (including government taxes.)

Meanwhile, the Metal and Mineral Index led the way in April, jumping 12.1% month-over-month. While most base and precious metal prices eased, huge gains in coking coal and potash at the Port of Vancouver pushed the sub-index to a record high.