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Weekly Commodities ETF Report: Fears of Economic Slowdown, US-China Trade Talk Tensions Drive Most Commodities Lower

(MT Newswires) – Crude prices ended Friday’s session higher but ultimately ended the week in the red as concerns about a possible drop in energy demand due to a global economic slowdown and the ongoing US-China trade dispute continue to weigh on the commodity. Although prices have been moving up at times amid expectations the OPEC-led production cuts and US sanctions on Venezuela’s state-run oil company will tighten global crude supply, recent data showing higher crude output in the US held gains in check.  Energy services firm Baker Hughes (BHGE) reported Friday that the number of oil rigs operating in the US rose by seven to 854. The combined oil and gas rig count in the US climbed by four to 1,049 as gas rigs fell by three to 195. Earlier in the week, the Energy Information Administration said crude inventories increased by 1.26 million barrels last week, less than the 2.2 million-barrels gain expected. On the other hand, data from the American Petroleum Institute showed a build of 2.5 million barrels of US crude inventories last week.

Light, sweet crude oil for March delivery fell 4.77% for the week, settling at $52.72 per barrel at the end of Friday’s session. In other energy futures, gasoline rose during the week, up 0.76% and settling at $1.45 per gallon on Friday. Natural gas for March delivery slumped 4.50% this week at $2.58 per 1 million British thermal unit.

The SummerHaven Dynamic Commodity Index Total Return Index (SDCITR) was 0.34% lower this week, compared with an increase of 0.02% in the previous week.

Gold wrapped up the Friday session higher as global growth worries prompted traders to shun riskier investments like equities and seek the safe-haven asset, however the yellow metal ended the week slightly lower, down 0.32%, closing at $1,318.50. Meanwhile, these same concerns drove copper lower at Friday’s close, settling at $2.81 per pound, but the red metal ended the week up 1.43%. On Thursday, Germany reported an unexpected decline of 0.4% in its industrial output for December — the fourth consecutive monthly decrease. As well, the European Commission lowered its growth forecasts for Italy and Germany and the eurozone as a whole.  Meanwhile, the Bank of England said it sees its slowest economic growth in a decade and lowered its 2019 GDP growth forecast to 1.2% from 1.7%.

In agriculture commodities, grains ended the week lower: wheat dropped 1.24% lower and settled at $5.17 per bushel at the end of Friday’s session; corn slipped 1.06% in the week and settled at $3.74 per bushel in Friday’s session; and soybeans fell 0.11% for the week, but closed Friday in positive territory at $9.15 per bushel. It was the second weekly loss in a row for soybeans, even though the commodity started the week with modest gains. Prices for soybean futures rose on fears of a decline in crop yields from South American; however, those gains dissipated when Parana, the second largest producing state in Brazil, reported that crops had minimal damage from drought, and that the soybean harvest was ahead of the season. Separately, worries over the US-China trade deal resurfaced to weigh on commodities during the week after US President Donald Trump said there were no plans for a meeting with Chinese President Xi Jinping before the March 1 trade deal deadline.  Also, there have been reports that Trump will sign an executive order that would ban the use of Chinese-made wireless equipment in US networks — a move that aims to increase cyber security for the US but might exacerbate trade tensions.

Other soft commodities were mixed: sugar had a weekly increase of 1.03% and settled at a price of $0.13 per pound on Friday; coffee was around $1.03 per pound at Friday’s close, down 1.30% for the week; and cocoa inched 1.01% higher for the week and closed Friday’s session at $2,196 per tonne.

The SummerHaven Dynamic Agriculture Index Total Return Index (SDAITR) was down 1.09% for the week, compared with a decrease of 0.52 in the prior week.


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