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Weekly Commodities ETF Report: Crude Ends Week Higher as OPEC, Other Oil Producers Agree to Cut Production; Gold Logs Biggest Weekly Gain Since August

(MT Newswires) – Crude oil ended Friday’s session higher, with the week starting off with modest losses ahead of the scheduled meeting of the Organization of Petroleum Exporting Countries (OPEC) and other key producers. There was some uncertainty as Russia appeared reluctant to cut back production, fueling concerns that global supplies will well outstrip demand in 2019. Additionally, US President Donald Trump has been pressuring the organization to keep prices low, tweeting, “Hopefully Opec will be keeping oil flows as is, not restricted. The World does not want to see, or need, higher oil prices!” On Friday, crude prices turned higher following news that OPEC and other oil producers ended their two-day meeting in Vienna with an agreement to cut their output by 1.2 million barrels in an effort to reduce the market oversupply that has hurt prices and producers’ revenue in recent weeks. Iranian Oil Minister Bijan Namdar Zangeneh confirmed the size of the cut at the meeting of the 25 countries that account for nearly half of global oil supplies. If the group fully implements the plan, current global oil production would decrease by about 1.2%. Back home, the Energy Information Administration reported that crude stockpiles in the US dropped sharply last week for the first time in 11 weeks, announcing a drawdown of 7.3 million barrels in the week to Nov. 30, compared with analyst expectations for a decrease of just 942,000 barrels. This compares with the American Petroleum Institute report that US crude oil inventories surged by 5.4 million barrels to 448 million barrels last week. Finally, Baker Hughes (BHGE) said Friday that the number of oil rigs operating in the US dropped to 877 last week, the lowest since Nov. 2.

Light, sweet crude oil for January delivery had a weekly uptick of 3.25%, settling at $52.61 per barrel at the end of Friday’s session. In other energy futures, gasoline rose during the week, up 5.33% and settled at $1.49 per gallon on Friday. Meanwhile, natural gas for January delivery fell 2.84% for the week and was up Friday at $4.49 per 1 million British thermal unit.

The SummerHaven Dynamic Commodity Index Total Return Index (SDCITR) was 2.07% higher for the week, compared with a gain of 0.23% in the previous week.

Gold ended the Friday session higher, settling at $1,252.60 — the highest settlement price since July. It ended the week up 2.10% — the biggest weekly gain since August. As with most commodities, the yellow metal logged gains after the announced trade truce between the US and China earlier in the week. Gold’s gains solidified after the US dollar slipped against major currencies amid speculation the Federal Reserve will pause its interest rate hike agenda in the coming year. Chances of the Fed pausing monetary tightening in the foreseeable future have increased following the release of the Labor Department’s monthly jobs report that showed a much-less-than-expected addition in US employment in the month of November. Traders are now looking ahead to the Fed’s Federal Open Market Committee meeting, to be held Dec. 18-19.

On the other hand, copper ended Friday’s session up at $2.76 per pound, getting some lift from the US dollar’s decline but ultimately ended the week down 1.45% — the third weekly decline in a row. The US-China trade dispute continues to weigh on industrial metals, despite the announced trade truce earlier in the week. There is skepticism about the truce between the two countries, which was compounded by the arrest of a Chinese executive in Canada reportedly at the behest of US officials. Huawei Technologies’ Chief Financial Officer Meng Wanzhou was arrested in Canada and may be extradited to the US on suspicions of breaching the trade embargo on Iran. Meng is the daughter of the founder of the smartphone and telecoms equipment maker, who’s also a former high-ranking official in the Chinese military.

Agriculture commodities ended the week mostly higher, lifted by developments in the trade dispute between the US and China — despite doubts that a concrete deal could be signed soon. Grains were the biggest gainers for the week — wheat increased 3.15% and settled at $5.31 per bushel at the end of Friday’s session; corn was up 2.26% in the week and settled at $3.86 per bushel in Friday’s session; and soybeans rose 2.55% for the week, closing at $9.17 per bushel on Friday. Traders are now waiting for China to renew its purchase of US soybeans and other agricultural products — the real confirmation that the trade negotiations have made progress. However, soybeans could see more pressure in the weeks ahead on expectations that Argentina could raise its soybean exports to China to 14 million tonnes this season, should the US-China trade war continue. Additionally, Brazil’s soybean output is forecast to reach record levels, which would in turn reduce China’s need for US-sourced soybeans. In other agriculture commodities, sugar had a weekly decline of 0.16% and settled at a price of $0.13 per pound on Friday; coffee was around $1.04 per pound at Friday’s close, down 3.30% for the week; and cocoa rose 3.00% for the week and closed Friday’s session at $2,225 per tonne.

The SummerHaven Dynamic Agriculture Index Total Return Index (SDAITR) rose 0.03% higher for the week, a smaller gain from the 0.22% increase in the prior week.


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