The commodity price rally that has helped propel the S&P/TSX Composite Index to all-time highs could continue if cold winter weather takes hold overseas, according to one analyst. 
“We’re in a really weather-sensitive situation here where we could see natural gas prices really, even, double from here if we get some really cold weather and we could see crude oil prices break through US$100,” said  Randy Ollenberger, managing director of oil and gas equity research at BMO Capital Markets, in an interview Monday. 
“There could be some pretty significant increases in pricing here if we do get some really cold weather early – so, in December,” he said. “We’re talking about cold weather in Europe and Asia, that’s really where it’s critical.
“If we don’t, I think we’re setting the stage for a – I wouldn’t say collapse – but certainly a downturn in prices pretty quickly in the first quarter.”
U.S. benchmark West Texas Intermediate crude ended the day unchanged in New York on Monday at US$83.56 per barrel, erasing its gains from earlier in the session when it touched US$85 for the first time since 2014. 
Meanwhile, natural gas prices have been surging, hitting a 12-year high this month, causing a major energy crunch that’s rippled through Europe and Asia.
Ollenberger said there will likely be some volatility ahead for commodity prices and energy stocks; but, overall, he expects the global economy is in for a few years of strong performance. 
“I think this current price rally we’re seeing for oil, natural gas and coal is a bit temporary. I think it is weather induced and a function of a lot of things that have already happened on a year-to-date basis but it’s a precursor of what’s to come.
“If we see some really cold weather in Europe and Asia in December, I think those price levels are certainly achievable. In North America of course, we can’t really export as much natural gas as you’d like to in those pricing environments so there would be some limitations on how high prices could go here in North America but they would certainly move up in sympathy,” he said.