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Weekly Commodities ETF Report: Renewed Trade War Jitters Weigh on Precious Metals, Agricultural Commodities; Oil Slumps on Higher Crude Supplies

(MT Newswires) – – Crude ended in negative territory for the week, as the the possibility of a higher crude supply continued to rattle global markets. Next week, the Organization of Petroleum Exporting Countries (OPEC) will hold a meeting where heavyweights Russia and Saudi Arabia will probably signal an increase in production, ending a policy of curtailing output to remove excess supply. Saudi Arabia is looking at raising production by 500,000 to 1 million barrels per day (bpd) and Russia is mulling lifting it by as much as 1.5 million barrels a day, according to media reports. However, certain OPEC members such as Iran and Venezuela look to be resistant to the move, and so the increase may not be as much as Saudi Arabia and Russia want. In the US, Baker Hughes (BHGE) reported that the number of oil rigs operating in the US over a rolling seven-day period ending June 15 rose by one to 863, its highest level since March 13, 2015. The combined oil and gas rig count in the US fell by three to 1,059 as gas rigs slipped by four to 194. Expectations for the increase in crude supplies had been bolstered earlier in the week by the International Energy Agency (IEA), which revised up its estimate for 2018 non-OPEC production growth to 2 million bpd and a “bumper growth” of 1.7 million bpd in 2019. The US shows by far “the biggest gain” in output, about 75% of the total across 2018 and 2019, the IEA noted.

Over the last five days, light, sweet crude oil for July delivery was down 1.4% and closed at $65.06 per barrel. In other energy futures, gasoline fell during the week, down 4.42% and settled at $2.01 per gallon at the close of Friday’s session. Meanwhile, natural gas rose 3.89% higher this week and was higher in Friday’s session at $3.02 per 1 million British thermal unit.

The SummerHaven Dynamic Commodity Index Total Return Index (SDCITR) fell 2.66% this week, from an decline of 0.09% in the previous week.

Gold ended the Friday lower, settling at $1,278.50 to finish the week down 1.62%, and reversing mid-week gains as the dollar continued to rise amid rekindled trade war fears. President Donald Trump approved tariffs on about $50 billion of Chinese goods, as the US ratcheted up its trade fight with Beijing over China’s alleged pressure on US firms to transfer technology to Chinese partners. China is expected to retaliate with its own tariffs in return. Earlier in the week, the yellow metal held modest gains despite a much bigger-than-expected increase in US retail sales in the month of May. The Commerce Department said retail sales jumped by 0.8% in May after climbing by an upwardly revised 0.4% in April. That will likely result in US GDP above 4% in the second quarter. The Federal Reserve said this week that it intends to raise interest rates twice more in 2018 in order to prevent the economy from overheating. Copper, meanwhile, settled at $3.14 at the end of Friday’s session, and was down 5.08% for the week — the biggest weekly drop since April. Throughout the week the markets have been grappling with concerns over the slowing of growth, particularly in China, which is the top metals buyer. The new round of US tariffs on Chinese goods could put more pressure on China’s economy. This is coupled with China’s weaker-than-expected industrial output, investment and retail sales for May.

Agriculture commodities ended the week mostly lower: sugar had a weekly decline of 1.36% and settled at a price of $0.12 per ton on Friday; coffee was at $1.15 per pound at Friday’s close, with a weekly drop of 1.58%; and cocoa rose 3.71% for the week and closed Friday’s at $2,519. Among grains, corn was down 3.46% in the week and settled at $3.82 per bushel in Friday’s session; and wheat was down 4.86% for the week and settled at $5.13 per bushel at the end of Friday’s session. Soybeans took another weekly tumble, down 6.11%, closing at $9.31 per bushel on Friday as most traders saw the fresh round of tariffs on Chinese goods as largely negative for the soybean market. China could impose its own tariffs, particularly on agricultural products like soybeans and beef. Previously, China had threatened to impose a 25% tariff on American soybean imports.

The SummerHaven Dynamic Agriculture Index Total Return Index (SDAITR) fell 1.73% for the week, compared with a decline of 1.84% in the prior week.

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