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Weekly Commodities ETF Report: Crude Logs Weekly Decline on Worries Over Slowing Global Growth, Weaker Demand; Gold Ekes Out Gains Following Fed Rate Decision

(MT Newswires) – Crude ended Friday’s session lower and closed out last week in the red, amid worries that a slowdown in the global economy could undercut crude oil demand. These concerns have overshadowed media reports suggesting that production cuts from the Organization of the Petroleum Exporting Countries (OPEC) starting next month will be deeper than expected. Russian oil output has been at a record high of 11.42 million barrels per day (bpd) in December so far and US shale output is growing steadily, leaving investors wondering whether the OPEC supply cuts of 1 million to 1.3 million barrels a day would be enough to stabilize the oil market. Back home, the latest data from the Energy Information Administration showed that US crude oil inventories dropped last week by 497,000 barrels — less than the 2.4 million barrels decrease expected but still the third straight weekly decline. This compares with the American Petroleum Institute report that US crude oil inventories showed a surprise gain of 3.5 million barrels. Finally, Baker Hughes (BHGE) said Friday that the number of oil rigs operating in the US jumped by 10 to 883, the highest level since Nov. 30. The combined oil and gas rig count in the US also rose by nine to 1,080 as gas rigs slipped by one to 197.

Light, sweet crude oil for February delivery had a sharp decline of 11.88% for the week, settling at $45.59 per barrel at the end of Friday’s session. In other energy futures, gasoline fell during the week, down 10.21% and settling at $1.31 per gallon on Friday. Meanwhile, natural gas for March delivery sank 2.95% this week at $3.54 per 1 million British thermal unit.

The SummerHaven Dynamic Commodity Index Total Return Index (SDCITR) was 2.57% lower this week, compared with a decline of 1.00% in the previous week.

Gold ended the Friday session lower, settling at $1,258.10 but ultimately ending the week 1.34% higher. The yellow metal logged gains and hit a near six-month high on the back of weakness from the US dollar, which fell against its rivals in European trade. The greenback was weighed by the Federal Reserve’s decision reiterating its commitment to tighten monetary policy, despite rising risks to growth. The Fed hiked the federal-funds rate by 0.25 percentage points to a range between 2.25% and 2.5% and said it has now penciled in two rate hikes in 2019, not the three moves seen in September, and still forecasts one more hike for 2020. On the other hand, copper ended Friday’s session down at $2.67 per pound, and closed the week 3.14% lower, even as an industry study group reported a widening supply deficit for the red metal. The International Copper Study Group (ICSG) reported that the global world refined copper market showed a 168,000 tonne deficit in September, compared with a 43,000 tonne deficit in August. Analysts are now expecting the red metal to benefit from the supply-demand deficit in 2019, especially if the US-China trade dispute becomes resolved in the next year.

Agriculture commodities ended the week mostly lower. Sugar had a weekly decrease of 3.37% and settled at a price of $0.12 per pound on Friday; coffee was around $1.00 per pound at Friday’s close, down 2.54% for the week; and cocoa rose 0.62% for the week and closed Friday’s session at $2,271 per tonne. Among grains, wheat fell 3.11% and settled at $5.14 per bushel at the end of Friday’s session; and corn was down 1.62% in the week and settled at $3.79 per bushel in Friday’s session. Meanwhile, soybeans fell 1.92% for the week, closing at $8.98 per bushel on Friday. Reuters had reported that China intends to make a third round of US soybeans purchases before the year-end. The report, which cited two unnamed sources familiar with the matter, said that China will be purchasing more than 2 million tonnes, likely just before the Christmas holiday. This would bring the total US sales to China to more than 5 million tonnes in December. However, this would still be less than a quarter of the purchases China made in the same month a year ago.

The SummerHaven Dynamic Agriculture Index Total Return Index (SDAITR) was 2.49% lower for the week, compared with the 0.11% increase in the prior week.


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