(MT Newswires) – Crude ended Friday’s session higher, closing the week in positive territory. Prices started the week lower, following reports citing sources that staid future meetings of the Organization of the Petroleum Exporting Countries (OPEC) and decisions will be even more “fraught” amid conflict among members. However, prices surged by Thursday, when a US military drone in the Gulf region was downed, with the US and Saudi Arabia accusing Iran of the attack. US President Donald Trump reportedly ordered US airstrikes on Iran, but later called it off because he was told 150 people would die in the attacks, which he said would not be a “proportionate” response for the downing of an unmanned drone. Meanwhile, the Energy Information Administration reported Wednesday that crude inventories fell by 3.1 million barrels to 482.4 million barrels in the week ended June 14. This erased the prior week’s 2.2 million-barrel build and was also larger than the American Petroleum Institute’s forecast for an 812,000-barrel weekly decline. Finally, energy services firm Baker Hughes (BHGE) reported Friday that the number of oil rigs operating in the US rose this week, breaking a two-week streak of declines. The oil rig count rose by one to 789 through Friday. That’s down 73 rigs from the same period of 2018. Baker Hughes said the total US rig count was down by two in the week to 967, as gas rigs fell by four to 177. A year ago, the US had 181 gas rigs in operation, for a total of 1,052.
Light, sweet crude oil for August delivery surged 9.79% for the week, settling at $57.07 per barrel at the end of Friday’s session. In other energy futures, gasoline was up 5.00% during the week and settled at $1.79 per gallon on Friday. Natural gas fell 9.00% for the week but closed up Friday at $2.17 per 1 million British thermal unit.
The SummerHaven Dynamic Commodity Index Total Return Index (SDCITR) rose 1.98% this week, compared with a decline of 0.42% the prior week.
Gold finished Friday’s session at $1,396.90 and closed the week with a gain of 4.27% — the best weekly gain in about three years. Prices for the yellow metal touched a six-year high in the early hours of the morning on Friday as the Federal Reserve’s signal that it is ready to “sustain” the economic expansion pushed US 10-year bond yields below the psychologically important 2% mark. The Federal Reserve said on Wednesday that “uncertainties” about its outlook — sustained expansion of economic activity, strong labor market conditions, and inflation near the 2% objective — have “increased.”
“In light of these uncertainties and muted inflation pressures, the committee will closely monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion,” the central bank said in its statement. The Fed hasn’t lowered interest rates since 2008, the year of the global financial crisis. The probability of a cut in July is now placed at 100%, according to the CME FedWatch.
In contrast, copper closed Friday’s session lower at $2.71 per pound but rose 2.70% for the week. On Thursday, copper logged gains and touched three-week highs after the US Federal Reserve left interest rates unchanged, as expected. Supply concerns for the red metal also eased following reports that the strikes at the Chuquicamata copper mine could come to an end, as labor unions and Chile’s Codelco — the world’s top copper producer– set a schedule to discuss an improved contract offer.
In agriculture commodities, corn fell 2.15% in the week and settled at $4.42 per bushel in Friday’s session; wheat fell 1.62% and settled at $5.31 per bushel at the end of Friday’s session; and soybeans were up 0.70% for the week, and closed Friday in the red at $9.03 per bushel. On Thursday, a member of the American Soybean Association (ASA) testified to the House Financial Services Committee Subcommittee on National Security, International Development and Monetary Policy, on the impact to soybean farmers of the recent tariffs imposed on the crop. Missouri farmer Ronnie Russell said soybean farmers’ “finances are suffering” and that “stress from months of living with the consequences of tariffs is mounting.” He called for the removal of the China tariff, adding that the “loss of the China market cannot be fully replaced.”
“The 25% retaliatory tariff imposed last July has all but halted shipments to China, which up until last year was the largest export destination for US soybeans. In 2017, China purchased $14 billion worth of US soybeans. Now, the tariff has caused immediate and severe damage to the price of US soybeans, which fell from $10.89 to $8.68 per bushel last summer,” ASA said further.
Other commodities were mixed: coffee was around $1.01 per pound at Friday’s close, up 1.88% for the week; cocoa was up 0.20% for the week and closed Friday’s session at $2,502 per tonne; and sugar had a weekly decrease of 3.41% and settled at a price of $1.25 per pound on Friday.
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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.
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USO001997 Ex. 9/30/2019