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Weekly Commodities ETF Report: Crude Sinks as Supply Concerns Resurface, US Production Hits New Record

(MT Newswires) – Crude ended Friday’s session in negative territory, declining for a tenth consecutive day, on renewed supply concerns as the US oil rig count jumped the most in six months along with weekly production in the US that hit a new record as inventories surged. The number of oil rigs operating in the US jumped by 12 to 886, which is also the highest level since March 6, 2015, according to data from Baker Hughes (BHGE). The combined oil and gas rig count in the US surged by 14 to 1,081 as gas rigs also climbed by two to 195. On Wednesday, the Energy Information Administration reported that crude inventories in the US increased by 5.8 million barrels in the week ended Oct. 2, rising much more than forecasts. This compares with the American Petroleum Institute’s report last Tuesday that US crude stocks climbed by 7.8 million barrels in the week ending Nov. 2 to 432 million. Earlier in the week, prices had risen following market chatter that ministers from the Organization of Petroleum Exporting Countries and its allies will discuss the possibility of cutting production again next year to support prices at $70 a barrel in its meeting in Abu Dhabi this Sunday. However, those gains melted as rising output and fears of a drop in crude demand due to economic slowdown weighed on the commodity once again. Crude oil’s current losing streak is reportedly its longest over three decades.

Light, sweet crude oil for December delivery had a weekly decline of 4.80%, settling at $60.19 per barrel at the end of Friday’s session. In other energy futures, gasoline declined during the week, slumping 5.01% lower and settling at $1.62 per gallon on Friday. Meanwhile, natural gas rose 11.89% this week and was up Friday at $3.72 per 1 million British thermal unit.

The SummerHaven Dynamic Commodity Index Total Return Index (SDCITR) fell 1.92% this week, from a decline of 1.86% in the previous week.

Gold closed the Friday session lower, settling at $1,208.60 and ended the week down 1.97%, recording its biggest weekly fall in more than two months, as the US dollar gained in strength on the back of the Federal Reserve’s statement that it would continue to raise interest rates gradually. The greenback’s gains were also spurred by inflation data, which showed the US producer price index to have increased by a more than expected 0.6% in October, raising prospects of a rate hike in December. With more rate increases very likely in the coming year as well, the dollar has been moving higher against most major currencies. On Thursday, the Federal Reserve left interest rates unchanged, citing realized and expected labor market conditions and inflation. The central bank reiterated that it expects further gradual increase in interest rates will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near its 2% objective over the medium term. Meanwhile, copper ended Friday’s session at $2.69  per pound, and fell 4.93% for the week, due to worries over a slowdown in the Chinese economy, which would affect demand for materials, especially those used for manufacturing and construction. On Thursday, China reported that its copper imports in October declined 19%. China consumes nearly half the world’s  copper.

Agriculture commodities ended the week lower. Sugar had a weekly decline of 4.91% and settled at a price of $0.13 per pound on Friday; coffee was around $1.14 per pound at Friday’s close, down 5.1% for the week; and cocoa fell 1.00% for the week and closed Friday’s session at $2,287 per tonne. Among grains,wheat fell 1.23% and settled at $5.02 per bushel at the end of Friday’s session; and corn was down 0.47% in the week and settled at $3.70 per bushel in Friday’s session.  Meanwhile, soybeans slipped 0.08% lower for the week, closing at $8.87 per bushel on Friday, as the US Department of Agriculture (USDA) cut its US soybean crop estimates, but said it expects stocks to rise sharply due to the ongoing US- China trade war, which is weighing on exports. The USDA on Thursday said it expects 2018/19 US soybean production at 4.600 billion bushels, down from its previous estimate of 4.690 billion bushels. The agency boosted its estimate of the 2018/19 soybean ending stocks to 955 million bushels, above the average analysts’ estimate of 898 million bushels. It also lowered its export forecasts for the current marketing year to 1.900 billion bushels from 2.060 billion bushels.

The SummerHaven Dynamic Agriculture Index Total Return Index (SDAITR) declined 1.59% for the week, compared with an incease of 0.88%in the prior week.


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