(MT Newswires) – Crude ended Friday’s session lower, closing the week in the red after the International Energy Agency (IEA) projected slower-than-expected growth in demand in Q2, outweighing the impact on prices of attacks on two oil tankers in the Strait of Hormuz, a passage on the south coast of Iran through which almost a fifth global oil flows. The Paris-based IEA’s report put a ceiling on oil prices on Friday, as it said global demand growth was set to be lower by 100,000 barrels per day in Q2, compared with its previous forecast a month ago. It cited a warm winter in Japan, a slowdown in the petrochemicals industry in Europe and a worsening trade outlook across all regions as contributing factors to its expectations. Meanwhile, the Energy Information Administration reported Wednesday that US crude oil stockpiles rose unexpectedly for a second consecutive week. Crude stockpiles climbed by 2.2 million barrels – that compares with expectations for a 481,000-barrel drop in a Reuters’ survey of analysts. On the other hand, the American Petroleum Institute said Tuesday that crude oil levels climbed by 4.9 million barrels. Finally, energy services firm Baker Hughes (BHGE) reported Friday that the number of oil rigs operating in the US fell by one to 788 — the lowest level since Feb. 2, 2018. The combined oil and gas rig count in the US fell by six to 969 as gas rigs fell by five to 181.
Light, sweet crude oil for August delivery fell 2.81% for the week, settling at $52.28 per barrel at the end of Friday’s session. In other energy futures, gasoline was down 0.38% for the week and settled at $1.72 per gallon on Friday. Natural gas rose 2.31% for the week, closing Friday at $2.33 per 1 million British thermal unit.
The SummerHaven Dynamic Commodity Index Total Return Index (SDCITR) fell 0.42% this week, compared with an increase of 1.35% the prior week.
Gold finished Friday’s session at $1,343.70, and earlier in the day reached its highest levels in 14 months. According to FactSet, prices hit the highest intraday and settlement levels since April 2018. Gold closed the week even. The yellow metal is getting a boost from its haven appeal, amid tensions in the Middle East and Hong Kong as well as rising expectations for a summer interest-rate cut from the Federal Reserve. The Federal Open Market Committee will be meeting next Tuesday and will release a policy decision Wednesday afternoon. Meanwhile, China has bought more gold to add to its international reserves as the country’s months-long trade disagreement with the US remained unresolved. According to Bloomberg, the People’s Bank of China, the central bank, raised its bullion reserves to 61.61 million ounces last month from 61.10 million ounces in April. Other central banks were also increasing their gold holdings, the report said.
In contrast, copper closed Friday’s session lower at $2.66 per pound, but inched 0.25% higher for the week as tepid industrial data from China weighed on the red metal. China’s industrial production rose 5% in May from a year earlier, while fixed income investment also rose at an annual rate of 5.6% last month, according to data released by the country’s National Bureau of Statistics. But both figures missed economists’ forecasts in a Reuters poll, which expected industrial production to grow 5.5% and fixed income investment to rise 6.1%. Meanwhile, concerns over supply risks have been raised as workers’ unions held a strike this week at Codelco’s Chuquicamata mine in Chile after a labor deal fell through. The Chuquicamata mine is the largest open pit copper mine in the world by excavated volume.
In agriculture commodities, corn rose 9.02% in the week and settled at $4.53 per bushel in Friday’s session; wheat jumped 7.15% and settled at $5.39 per bushel at the end of Friday’s session; and soybeans were up 4.88% for the week, and closed Friday in the green at $8.97 per bushel. Earlier this week, China’s General Administration of Customs reported that the country purchased 7.36 million tons of soybeans in May, down 24% on an annual basis and the lowest since 2015. The mainland, the biggest buyer of soybeans in the world, also saw soy imports in the five months ended May 31 decline 12.2% to 31.75 million tons. Meanwhile, Reuters reported that Chinese soybean buyers have asked American sellers to postpone soybean cargoes to be shipped in July to August. The report cited unnamed sources familiar with the matter. Reuters said that the renegotiations are sparking fears of cancellations, similar to ones that troubled the market last year. Six million tonnes of soybeans ordered by China have already been shipped, but about seven million tonnes more have yet to be delivered.
Other commodities were mixed: coffee was around $0.98 per pound at Friday’s close, down 2.58% for the week; cocoa was up 1.67% for the week and closed Friday’s session at $2,496 per tonne; and sugar had a weekly increase of 3.36% and settled at a price of $1.29 per pound on Friday. Prakash Naiknavare, managing director of India’s National Federation of Cooperative Sugar Factories Ltd., said earlier this week that sugar output in India is expected to drop to a three-year low next season as record heat takes a toll on cane plants in many regions. Bloomberg quoted Naiknavare as saying that during the new season starting Oct. 1, the sugar output is likely to fall from 33 million tons this year. Sugar production in Maharashtra, the country’s second-biggest grower, is also likely to fall about 40% to 6.44 million tons in 2019-2020 from this year, the report added.
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The SummerHaven Dynamic Commodity Index Total ReturnSM (SDCITR) is an index designed to reflect the performance of a portfolio of 14 commodity futures. The index is reformulated each month from 27 possible futures contracts. The 14 selected contracts are equally weighted and represent six sectors: Energy (WTI crude oil, Brent crude oil, natural gas, heating oil, gasoil, RBOB gasoline), Precious Metals (gold, silver, platinum), Industrial Metals (aluminum, copper, lead, nickel, tin, zinc), Grains (corn, soybeans, soybean meal, soybean oil, wheat), Livestock (live cattle, feeder cattle, lean hogs) and Softs (coffee, cocoa, cotton and sugar). One Cannot invest directly in an index. Performance is historical and does not guarantee future results; current performance may be lower or higher. Investment returns/principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Most recent performance is available at www.uscfinvestments.com.
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USO001995 Ex. 9/31/2019