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Weekly Commodities ETF Report: Crude Continues Weekly Slump on Forecasts of Weaker Demand in 2019; Gold Higher on Government Shutdown, Trade Worries

(MT Newswires) – Crude ended Friday’s session higher, but closed the week in the red, with Friday’s gains following a near 4% dive on Thursday. The price action continues the low-volume turbulent patch that many markets were experiencing in the past week. Prices hit 18-month lows for the week, despite the planned 1.2 million-barrel-per-day output cut by the Organization of the Petroleum Exporting Countries. Markets continue to see the supply and demand balance as out of kilter, with demand seen falling back in 2019 on the back of an anticipated slowing in global economic activity. The latest data from the Energy Information Administration showed that US stockpiles of commercial crude were “virtually unchanged” in the week ending Dec. 21. Inventories came in at 441.4 million barrels compared with 441.5 million barrels reported a week earlier. The stockpiles are still about 7% above the five-year average for this time of year. The slight change in the stockpiles data contrasts with the American Petroleum Institute’s expectation for a jump of 6.9 million barrels in the week to 448.2 million. Finally, Baker Hughes (BHGE) said Friday that the number of oil rigs operating in the US increased by two to 885 in the week ending Dec. 28. The combined oil and gas rig count in the US also rose by three to 1,083 as gas rigs rose by one to 198.

Light, sweet crude oil for February delivery fell 0.55% for the week, settling at $45.33 per barrel at the end of Friday’s session. In other energy futures, gasoline fell during the week, down 0.25% and settling at $1.30 per gallon on Friday. Meanwhile, natural gas for March delivery sank 8.11% on the week at $3.15 per 1 million British thermal unit.

The SummerHaven Dynamic Commodity Index Total Return Index (SDCITR) was 0.20% lower for the  week, compared with a decline of 2.57% in the previous week.

Gold ended the Friday session higher, settling at $1,283.00 and ending the week 1.88% higher. Prices for the yellow metal were higher for most of the week and hovered near a fresh six-month high as the dollar weakened against most major currencies and equities tumbled on growth concerns and political uncertainty after a historic run up north on Wednesday. Concerns about a partial US government shutdown and doubts about the US and China agreeing on a long-term trade deal before the expiry of the agreed 90-day truce also contributed to the sell-off in stock markets and made investors rush to the safe-haven metal. Additionally, US President Donald Trump’s recent comments about the Federal Reserve’s interest rate decisions, and market speculation that the Fed might go slow on monetary tightening from here on appear to be capping the dollar’s upside. On the other hand, copper ended Friday’s session up at $2.68 per pound, and closed the week 0.39% higher, logging weekly gains for the first time in five weeks. However, these gains were held in check by continuing concerns over the slowdown in economic growth in China, underscored by a decline in earnings of the country’s industrial firms in November. On Thursday, China’s National Bureau of Statistics reported that November industrial profits slipped 1.8% to RMB594.8 billion or $86.3 billion — the first decline since December 2015.

Agriculture commodities ended the week mostly higher. Sugar had a weekly increase of 0.32% and settled at a price of $0.12 per pound on Friday; coffee was around $1.01 per pound at Friday’s close, up 1.30% for the week; and cocoa rose 5.59% for the week and closed Friday’s session at $2,408 per tonne. Among grains, wheat fell 0.44% and settled at $5.12 per bushel at the end of Friday’s session; corn was down 0.92% in the week and settled at $3.76 per bushel in Friday’s session; and soybeans fell 0.08% for the week, closing at $8.96 per bushel on Friday.  In agricultural commodities news, China earlier announced that it is allowing imports of rice from the US — including brown rice, polished rice and crushed rice — for the first time, ahead of the trade talks that would resume between the two countries in early January. How much rice will be imported from the US, however, was not indicated. According to a report from Reuters, experts say that the price of US rice is not as competitive compared with rice sourced from Southeast Asia, and therefore China’s move can be taken as a gesture of goodwill. Rice closed the Friday session at $0.10 per cwt and fell 4.83% for the week.

The SummerHaven Dynamic Agriculture Index Total Return Index (SDAITR) was 0.91% lower for the week, compared with the 2.49% decrease in the prior week.


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