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Weekly Commodities ETF Report: Crude Ends Week Sharply Lower as Oversupply Worries Overshadow Hopes for OPEC Production Cuts

(MT Newswires) – Crude ended Friday’s session in negative territory, extending its recent decline to its lowest level in more than a year. A continued increase in supply, which has outpaced global demand for crude, has contributed to the lower prices, despite oil producers reportedly looking to cut production. Scotiabank analysts Friday morning said indications of record output from Saudi Arabia and the resumption of China’s imports from Iran, which will increase supply in other exporting countries, are also weighing on oil prices. The Organization of the Petroleum Exporting Countries (OPEC) is considering a deal to discuss cutting production at an upcoming meeting on Dec. 6. Upset over US waivers on Iranian crude imports earlier this month, Saudi Arabia is in discussion with OPEC and its allies to cut global output by about 1.4 million barrels per day, or 1.5% of global supply, media reports suggest. The latest media reports on Friday also said that OPEC will balance this reduction in output with US President Donald Trump’s demands for lower prices. On Wednesday, the Energy Information Administration reported that for the week ended Nov. 16, US crude oil inventories had a higher-than-expected build of 4.9 million barrels — the ninth consecutive weekly build. In last week’s report, crude oil inventories rose 10.3 million barrels to 442.1 million barrels. Meanwhile, the American Petroleum Institute said on Tuesday that US weekly crude oil inventories fell by 1.5 million barrels to 439.2 million barrels, versus an expected increase of 2.9 million barrels. Finally, the number of oil rigs operating in the US decreased to the lowest level in three weeks, Baker Hughes (BHGE) said. Data from the energy services firm showed that the rig count, an indicator of future crude output, fell by three to 885 in the week.

Light, sweet crude oil for January delivery had a weekly decline of 10.68%, settling at $50.42 per barrel at the end of Friday’s session. In other energy futures, gasoline declined during the week, down 12.23% lower and settling at $1.38 per gallon on Friday. Meanwhile, natural gas fell 0.75% this week and was down Friday at $4.36 per 1 million British thermal unit.

The SummerHaven Dynamic Commodity Index Total Return Index (SDCITR) was 3.65% lower this week, from a decline of 0.96% in the previous week.

Gold ended the Friday session higher, settling at $1,223.20, to close the week up 0.80%. On Wednesday, the yellow metal hit its highest settlement price in two weeks on the back of weakness in the dollar. But by Friday, gold had trimmed its gains as traders became more cautious ahead of next week’s G20 summit in Buenos Aires, Argentina, taking place from Nov. 30 to Dec. 1. Trump and his Chinese counterpart, Xi Jinping, are expected to meet on the sidelines of the G20 summit.  The talks are unlikely to trigger a breakthrough as the two leaders have deep disagreements on an array of issues. The US tariff rate on $200 billion in Chinese goods is set to increase to 25% from 10% on Jan. 1. Trump also said he would move ahead with imposing another round of tariffs on an additional $267 billion in goods, effectively covering all Chinese exports to the US, if no agreement can be reached. On the other hand, copper ended Friday’s session down at $2.79 per pound, but scraped by with gains of 0.56% for the week.  Much of the weakness in the red metal was brought on by lingering trade war concerns. Traders are digesting the latest report from the World Bureau of Metal Statistics, which recorded a deficit in the copper market of 6.3 kiloton in the period from January to September 2018. This compares with a surplus of 93.8 kiloton in the whole of 2017. For the January to September 2018 period, world mine production was 15.36 million tonnes and refined production was 17.52 million tonnes; global consumption was 17.53 million tonnes compared with 17.49 million tonnes for the same months in 2017.

Agriculture commodities ended the week mainly lower. Sugar had a weekly decline of 1.34% and settled at a price of $0.13 per pound on Friday; coffee was around $1.11 per pound at Friday’s close, down 2.46% for the week; and cocoa fell 3.98% for the week and closed Friday’s session at $2,122 per tonne. Among grains, wheat fell 1.46% and settled at $5.07 per bushel at the end of Friday’s session; and corn was down 2.05% in the week and settled at $3.71 per bushel in Friday’s session.  Meanwhile, soybeans fell 0.93% lower for the week, closing at $8.81 per bushel on Friday, as prices continued to be pressured by concerns over a prolonged trade war between the US and China. Meanwhile, the US Department of Agriculture said that private exporters reported the sale of 123,567 tonnes of soybeans for delivery to unknown destinations during the 2018-19 marketing year.

The SummerHaven Dynamic Agriculture Index Total Return Index (SDAITR) fell 0.87% lower for the week, compared with a decline of 0.02% in the prior week.


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