(MT Newswires) – Crude ended Friday’s session higher amid ongoing tensions in the Middle East, which are threatening the free flow of oil in the region. Iran and the UK are embroiled in a tense standoff over British authorities’ seizure of an Iranian tanker off Gibraltar in early July and Iran’s detention of a UK-flagged ship last week. Supply issues also came to the fore after Hurricane Barry caused some temporary disruptions earlier in the month. Analysts are pointing to the Gulf of Mexico storm as one of the primary reasons for a decline in US crude inventories. Stockpiles dropped 10.8 million barrels in the week through July 19 to 445 million barrels, according to data published by the Energy Information Administration. That was a sharper fall than the decline of 3.1 million barrels in the previous week and the 11.0-million-barrel weekly stock draw reportedly expected by the American Petroleum Institute. Finally, the number of oil rigs operating in the US fell by three over the week to 776, according to data compiled by energy services firm Baker Hughes (BHGE). The week’s tally was the lowest since the 765 rigs reported in the week ended Feb. 2, 2018.
Light, sweet crude oil for September delivery rose 0.75% for the week, settling at $56.02 per barrel at the end of Friday’s session. In other energy futures, gasoline was down 1.40% during the week and settled at $1.83 per gallon on Friday. Natural gas logged a decrease of 4.35% on the week, ending Friday at $2.23 per 1 million British thermal units.
The SummerHaven Dynamic Commodity Index Total Return Index (SDCITR) fell 0.51% this week, compared with a drop of 2.36% in the prior week.
Gold finished Friday’s session higher at $1,414.70, recovering from Thursday’s sharp losses, but closed the week in negative territory, down 0.66%. Friday’s gains were spurred by the advanced Q2 Gross Domestic Product (GDP) report, which showed that the US economy slowed sequentially in the quarter, validating the Federal Reserve’s recent view that economic stimulus may be required to “sustain” the country’s economic expansion. On Thursday, the yellow metal saw a steep decline after the European Central Bank (ECB) decided to maintain interest rates at their current levels. Expectations had been for the ECB to cut benchmark rates ahead of the US Federal Reserve’s policy meeting next week. Meanwhile, copper prices ended the week down 1.86% and closed Friday lower at $2.70 per pound, even as the resumption of US-China trade talks helped brighten the economic outlook in the base metal markets. China and the US confirmed a two-day face-to-face meeting on July 30 in Shanghai, the first meeting since the leaders of the two countries agreed to a trade war ceasefire. In the planned negotiations, the US side will be led by Robert Lighthizer and Treasury Secretary Steven Mnuchin, while Vice Premier Liu He will head the other.
In agriculture commodities, European Union (EU) imports of US soybeans increased by almost 100% from July 2018 to June 2019, compared with the same period the previous year. The US is now Europe’s leading soybeans supplier and has been able to expand its market further, following the decision by the European Community (EC) in January to authorize the use of US soybeans for biofuels. Soybeans were down 2.18% for the week, and closed Friday in the red at $9.01 per bushel. Among other grains, corn for September delivery fell 2.92% in the week and settled at $4.25 per bushel in Friday’s session; and wheat dropped 1.49% and settled at $4.96 per bushel at the end of Friday’s session. Other commodities were mixed: coffee was around $1 per pound at Friday’s close, down 6.86% for the week; cocoa was down 3.32% for the week and closed Friday’s session at $2,389 per tonne; and sugar had a weekly increase of 3.63% and settled at a price of $0.12 per pound on Friday.
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Commodity trading is highly speculative and involves a high degree of risk. Commodities and futures generally are volatile and are not suitable for all investors. Investing in commodity interests subject each Fund to the risks of its related industry. An investor may lose all or substantially all of an investment. These risks could result in large fluctuations in the price of a particular Fund’s respective shares. Funds that focus on a single sector generally experience greater volatility. Leveraged and inverse exchange-traded products pursue daily leveraged investment objectives which means they are riskier than alternatives which do not use leverage. They are not suitable for all investors and should be utilized only by investors who understand leverage risk and who actively manage their investments. For further discussion of these and additional risks associated with an investment in the Funds please read the respective Fund Prospectus before investing.
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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USO002023 Ex. 9/30/2019