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Weekly Commodities ETF Report: Crude Ends Week Lower on Demand Concerns Following China Manufacturing Data; Gold Sinks Below $1,300 as Strong US Q4 GDP Buoys Stocks

(MT Newswires) – Crude prices ended Friday’s session lower, as a downbeat picture of China’s economy raised demand concerns for the world’s top oil importer. China manufacturing activity fell to a three-year low in February as export orders dipped with the official Purchasing Managers’ Index (PMI) down to 49.2 in February from 49.5 in January. Some analysts attributed the weak data to the week-long Lunar New Year holidays in February when firms scale back operations or close for long periods. But others say the lingering US-China trade war is the culprit by diminishing overall economic activity in China. On the other hand, traders noted continued adherence by the Organization of the Petroleum Exporting Countries (OPEC) and allies to plans to curb production by 1.2 million bpd at least for the first six months of the year, with an April meeting set to review the pact. Meanwhile, the Energy Information Administration’s monthly report showed that US crude oil production edged lower in December to 11.85 million barrels per day (bpd), the first decline since last May. For the week, US crude stockpiles fell 8.6 million barrels, compared with an expected increase of 2.8 million barrels and breaking five straight weeks of builds. This also compares with the American Petroleum Institute’s report that crude inventories fell by 4.2 million barrels last week. Finally, energy services firm Baker Hughes (BHGE) reported Friday that the number of oil rigs operating in the US fell by 10 to 843, the lowest level since May 2018. The combined oil and gas rig count in the US slid by nine to 1,038 as gas rigs rose by one to 195.

Light, sweet crude oil for April delivery fell 2.30% for the week, settling at $55.80 per barrel at the end of Friday’s session. In other energy futures, gasoline was down 1.81% during the week, settling at $1.73 per gallon on Friday. Natural gas for April delivery was up 4.63% on the week and closed Friday at $2.86 per 1 million British thermal unit.

The SummerHaven Dynamic Commodity Index Total Return Index (SDCITR) was 1.31% lower this week, compared with an increase of 1.21% in the previous week to its lowest level in a month and half.

Gold wrapped up the Friday session lower, settling below the key $1,300 mark at $1,299.20; for the week, it declined 2.85% — the sharpest weekly fall since August. Demand for the precious metal weakened as US and global stocks were buoyed by a stronger-than-expected reading on the US economy last Thursday. The US gross domestic product grew at a 2.6% annual pace in the fourth quarter. Forecasts were for the GDP to increase at a 1.9% growth rate. Prices rose briefly on Friday following lackluster US ISM manufacturing and consumer-sentiment readings but the gains proved to be short-lived. On the other hand, copper closed Friday’s session at $2.93 per pound, slipping 0.73% for the week. The red metal’s losses were weighed by the latest manufacturing data out of China; the February Caixin Manufacturing PMI showed an increase to 49.9, beating forecasts, but this was still below 50.0, indicating that factory activity in the largest copper-consuming nation remained in contraction. Scotiabank’s commodity economist, Rory Johnston, provided an outlook on copper, saying in a research note, “Copper supply deficits are forecast to persist over the next five years and prices need to rise further in order to incentivize sufficient new mine capacity.”  The average price for the metal is forecast at $3 a pound this year and $3.20 in 2020.  Johnston also said that prices may need to rise further as mines make necessary new investments in capacity and capital markets shy away from risky mining projects.

In agriculture commodities, grains ended the week mostly lower as the market awaited more concrete trade developments and the finalization of a US-China trade deal: corn fell 3.25% in the week and settled at $3.73 per bushel in Friday’s session; soybeans fell 1.38% for the week, but closed Friday in positive territory at $9.12 per bushel; and wheat sank 6.68% and settled at $4.57 per bushel at the end of Friday’s session. Wheat futures were near 11-month lows as concerns that North American wheat will be facing stiff global competition pushed prices lower. Other commodities were mixed: sugar had a weekly decline of 5.11% and settled at a price of $1.26 per pound on Friday; coffee was around $1.00 per pound at Friday’s close, up 0.30% for the week; and cocoa fell 2.84% lower for the week and closed Friday’s session at $2,217 per tonne.

The SummerHaven Dynamic Agriculture Index Total Return Index (SDAITR) was down 1.34% for the week, compared with a decline of 0.21% in the prior week.


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