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Weekly Commodities ETF Report: Crude Higher on Risk of Supply Disruptions; Gold Rallies on Weaker Dollar as Fed Reiterates Plans for Interest Rate Hikes

(MT Newswires) – – Crude ended Friday’s session in positive territory as investors assessed the risk of supply disruptions amid a strike in the North Sea oil and gas fields. A scheduled industrial action over working rotas will go ahead, UK union Unite said in a statement, after talks between French oil refiner total and workers on three of its North Sea oil and gas platforms broke down on Thursday. Supply concerns have also mounted, with US sanctions against Iranian oil exports set to take full effect in November. It is expected the sanctions could significantly impact global supply and exhaust the world’s spare oil capacity. Prices have also been supported by shrinking US crude inventories. Supply data from the Energy Information Administration showed domestic crude supplies fell by 5.8 million barrels for the week ended Aug. 17. This compares with the American Petroleum Institute’s report last Tuesday that U.S. crude supplies fell by 5.2 million barrels. And, Baker Hughes (BHGE) reported active US rigs count fell by nine to 860 — the biggest drop in more than two years. This compares with 869 in the prior period, and 759 in the same period of 2017. Overall US count, including gas rigs, contracted by 13 to 1,044, but that’s still above the year ago tally of 940.

Over the last five days, light, sweet crude oil for October delivery jumped 5.09%, at $68.72 per barrel. In other energy futures, gasoline rose during the week, up 4.67% and settled at $1.98 per gallon at the close of Friday’s session. Meanwhile, natural gas fell 1.22% this week and was down Friday at $2.91 per 1 million British thermal unit.

The SummerHaven Dynamic Commodity Index Total Return Index (SDCITR) rose 0.84% this week, from an increase of 0.44% in the previous week.

Gold ended the Friday session higher, settling at $1,213.30. Except for modest losses in Thursday’s session, the yellow metal saw positive momentum to end the week higher, up 1.69% on the back of the dollar’s decline. The US dollar sank to a three-week low as market participants digested US Federal Reserve Chairman Jerome Powell’s Jackson Hole, Wyo. speech. Powell said more increases in the benchmark US lending rate were likely if the recent strong pace of growth in wages and jobs continued. The Federal Open Market Committee’s consensus is the “gradual process of normalization remains appropriate” as marked by rate hikes and a decline in the assets bought during the financial crisis to shore up the world’s biggest economy, Powell said. Earlier this week, US President Donald Trump reiterated his criticism of the Fed’s monetary policy, saying he was “not thrilled” with the Fed for raising rates. It remains to be seen whether Powell would respond to Trump’s criticism. On the other hand, copper ended Friday’s session higher at $2.72 and closed the week up 1.31% — its best weekly end since the end of July, with traders shrugging off the lack of progress in the US-China trade negotiations. The optimism generated by the trade talks between the two largest global economies earlier this week fizzled, as another round of tariffs from both countries were implemented.

Agriculture commodities ended the week mixed. Sugar had a weekly increase of 0.69% and settled at a price of $0.10 on Friday; coffee was at $1.04 per pound at Friday’s close, ending the week mostly flat; and cocoa jumped 9.96% higher for the week and closed Friday’s session at $2,364.  Among grains, corn was down 4.22% in the week and settled at $3.62 per bushel in Friday’s session; and soybeans fell 4.82% for the week, closing at $8.55 per bushel on Friday. Meanwhile, wheat fell 7.64% for the week — its worst week in the last two years — and settled at $5.36 per bushel at the end of Friday’s session. U.S. export sales of wheat have slowed down, with the U.S. Department of Agriculture reporting that exports were at 239,800 tons, below a range of trade expectations for 450,000 to 850,000 tons. Despite this, some traders have projected a lift in wheat prices due to global supply risks. Hot weather in other wheat-producing countries could affect wheat harvests and production.

The SummerHaven Dynamic Agriculture Index Total Return Index (SDAITR) fell 1.74% for the week, compared with an increase of 1.88% in the prior week.


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