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Weekly Commodities ETF Report: Crude Edges Lower, OPEC to Discuss Possible Output Cuts; Metals, Soft Commodities Get Lift on Hopes for US-China Trade Talks

(MT Newswires) – Crude ended Friday’s session lower, on pace for sharp declines this month of more than 20%. Worries about slowing growth continue, coinciding with signs of crude output increasing. On Friday, Russian Energy Minister Alexander Novak said during an interview with the TASS news agency that the Organization of Petroleum Exporting Countries (OPEC) and other key producers were comfortable with prevailing crude prices, causing markets to recalibrate odds for OPEC and non-OPEC countries to agree to an output trim at meetings that were scheduled for the sidelines of last weekend’s G20 gathering. On Wednesday, the Energy Information Administration reported that crude oil inventories in the US increased by 3.58 million barrels in the week to Nov. 23. That was the tenth straight weekly increase in inventories. The increase was also much more than the expected level. Meanwhile, the American Petroleum Institute reported on Tuesday a crude oil inventory build of 3.5 million barrels for the week ending Nov. 23. Distillate stockpiles rose by 1.2 million barrels, but gasoline supplies declined by 2.6 million barrels. Finally, Baker Hughes (BHGE) said Friday that the number of oil rigs operating in the US rose by two to 887 during the week, fluctuating within the narrow zone that’s constrained the tally in the month of November.

Light, sweet crude oil for January delivery had a weekly uptick of 0.60%, settling at $50.93 per barrel at the end of Friday’s session. On Thursday, the US oil benchmark dipped below the $50 a barrel mark for the first time in a year. In other energy futures, gasoline rose during the week, up 1.86% and settling at $1.40 per gallon on Friday. Meanwhile, natural gas rose 6.15% during the week and was up Friday at $4.61 per 1 million British thermal unit.

The SummerHaven Dynamic Commodity Index Total Return Index (SDCITR) was 0.23% higher for the week, from a decline of 3.65% in the previous week.

Gold ended the Friday session lower, down 0.18% for the week and settling at $1,226.00 as the US dollar gained in strength against most major currencies. Focus has been on the G20 summit and the much-awaited meeting of US President Donald Trump and Chinese President Xi Jinping, on the sidelines of the summit. According to reports, Trump said he was close to doing something on trade with Beijing but was not sure if he wanted to do it. Earlier in the week, the yellow metal logged gains as traders speculated on future rate hikes from the Federal Reserve. The minutes of the Fed’s November meeting suggest a rate hike in December, while indicating there may not be three increases in rates next year as projected earlier. According to the minutes, a few participants expressed uncertainty about the timing of future increases. On the other hand, copper ended Friday’s session down at $2.79 per pound, but eked out gains of 0.65% for the week. Prices for the red metal also reacted to developments in the ongoing trade dispute between the US and China, logging gains in the first part of the week. However, soft data from China dragged prices down in the latter half. China’s manufacturing for the month of November was flat month over month, with the Official Manufacturing Purchasing Managers Index coming in at 50.0, in line with the prior month and below expectations for a reading of 50.2.

Agriculture commodities ended the week mostly higher, lifted by optimism that a trade deal between the US and China might be signed over the weekend. Sugar had a weekly increase of 1.18% and settled at a price of $0.13 per pound on Friday; coffee was around $1.08 per pound at Friday’s close, down 3.24% for the week; and cocoa rose 2.28% for the week and closed Friday’s session at $2,203 per tonne. Among grains, wheat increased 1.78% and settled at $5.16 per bushel at the end of Friday’s session; and corn was up 1.76% in the week and settled at $3.78 per bushel in Friday’s session.  Meanwhile, soybeans rose 1.42% for the week, closing at $8.95 per bushel on Friday. Hopes for an end to the trade dispute between the US and China drove the modest price increases among most of the soft commodities, particularly soybeans, which has been the hardest hit by the prolonged trade spat. On Thursday, the US Department of Agriculture reported that China had bought a mere $9 billion worth of agricultural exports this fiscal year — down 45%, mainly due to the trade war. Higher soybeans sales to other countries are not expected to offset lost demand from China even as stocks in the US swelled due to record harvests.

The SummerHaven Dynamic Agriculture Index Total Return Index (SDAITR) rose 0.22% higher for the week, compared with a decline of 0.87% in the prior week.

 

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