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Weekly Commodities ETF Report: Crude Ends Week Lower as US Inventory Decline Misses Estimates; Gold Also Slumps as Strong Jobs Data Props Up US Dollar

(MT Newswires) – Crude ended Friday’s session higher on geopolitical issues but closed the week slightly in the red. Prices had risen following reports that police and British marines seized a Syria-bound oil tanker off Gibraltar, amid suspicions it was operating in breach of EU sanctions. Iran had condemned the “illegal interception” and summoned the British ambassador in Tehran. Earlier in the week, 10 nations that were non-members of the Organization of the Petroleum Exporting Countries (OPEC) on Tuesday agreed to follow the oil cartel’s lead and extend existing curbs on crude oil production by nine months in order to help prop up prices. Venezuelan oil minister Manuel Salvador Quevedo Fernandez made the announcement after a meeting in Vienna of the 14 OPEC countries and 10 other oil-producing nations. The current lower oil production level was agreed to in December and will now continue until the end of March 2020. The 14 OPEC countries meeting in Vienna already agreed on Monday to extend the cuts. A 24-nation expanded coalition, known as OPEC-Plus, has been following the cartel’s strategy. Meanwhile, US inventories of crude oil declined by 1.1 million barrels to 468.5 million barrels in the week ended June 27, data published by the Energy Information Administration showed. This was less than the 12.8 million barrel decline registered a week earlier and beneath than the five million-barrel drop projected by the American Petroleum Institute. Finally, energy services firm Baker Hughes (BHGE) came out with its oil-rig count report on Wednesday –earlier than usual due to the July 4 holiday. The company said active US rigs drilling for oil fell by five to 788 in the week — following two straight weeks of increases. The total active US rig count declined by four to 963. For the whole month of June, the number of oil rigs operating in the US fell to 969, from 986 in May and the 1,056 counted in June 2018.

Light, sweet crude oil for August delivery fell 1.01% for the week, settling at $57.34 per barrel at the end of Friday’s session. In other energy futures, gasoline was up 1.91% during the week and settled at $1.92 per gallon on Friday. Natural gas logged an increase of 3.93% this week, ending Friday at $2.29 per 1 million British thermal unit.

The SummerHaven Dynamic Commodity Index Total Return Index (SDCITR) fell 0.77% this week, compared with an increase of 0.32% the prior week.

Gold finished Friday’s session lower at $1,420.90, as Friday’s strong jobs data undermined prospects for the Federal Reserve to cut interest rates – thus sending bonds and the dollar higher. The government reported that nonfarm payrolls rose 224,000 in June against expectations for a 165,000 rise and the previous month’s 72,000 gain, revised from 75,000. The unemployment rate inched 10 basis points higher to 3.7% versus the no change expected by forecasters. Private payrolls rose 191,000 versus 149,000 estimated while manufacturing payrolls rose 17,000 versus 2,000 expected for the month, according to data compiled by Econoday. For the week, the yellow metal slipped 0.71% lower following two weeks of consecutive gains. Similarly, copper closed Friday’s session lower at $2.68 per pound, falling 2.06% for the week — it’s biggest weekly fall since May as the stronger dollar weighed on the commodities space. The slump could also be attributed to the lack of certainty over the US-China trade negotiations, as the current “trade ceasefire” between the two countries does not mean a firm deal could be finalized soon. The protracted trade row has dented the demand for metals over the past several months.

In agriculture commodities,  the US Department of Agriculture released its weekly export sales report, which showed that export sales for corn and wheat were on the lower end of analysts’ expectations, while soybean export sales, excluding China, were poor. Weekly export sales for soybeans were 867,600 metric tons, while corn export sales were 175,600 metric tons and wheat export sales were 276,500 metric tons. Among grains, corn for December delivery fell 1.83% in the week and settled at $4.42 per bushel in Friday’s session; wheat fell 5.40% and settled at $5.15 per bushel at the end of Friday’s session; and soybeans were up 0.65% for the week, and closed Friday in the red at $8.95 per bushel. Other commodities were mixed: coffee was around $1.11 per pound at Friday’s close, up 3.42% for the week; cocoa was up 0.45% for the week and closed Friday’s session at $2,463 per tonne; and sugar had a weekly decline of 3.44% and settled at a price of $1.24 per pound on Friday.

 

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Information Contact: Justin Hillstrom – 720.917.0770 Email: Justin.hillstrom@alpsinc.com, Website is www.uscfinvestments.com

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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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USO002000 Ex. 9/30/2019

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