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Weekly Commodities ETF Report: Crude Closes Week Higher as OPEC Lowers 2019 Demand Forecast; Gold Hits Six-Year High on Safe-Haven Buying

(MT Newswires) – Crude ended both Friday’s session and the week higher, driven by oversupply concerns, following the decision of the Organization of the Petroleum Exporting Countries to lower its 2019 oil demand forecast. The cartel left 2020 demand forecasts unchanged but added it “is subject to downside risks stemming from uncertainties with regard to global economic development.” In geopolitical news, officials in Gibraltar have allowed a detained Iranian supertanker to leave despite a last-minute US attempt to seize the vessel. The Supreme Court in Gibraltar had delayed a decision to release the Grace 1 after the US Department of Justice made an application to extend the vessel’s detention, the Gibraltar government said earlier on Thursday. But the Gibraltar Chronicle reports there was no US application before the court when the hearing resumed on Thursday afternoon, so the vessel was allowed to leave. The Grace 1, carrying 2.1 million barrels of Iranian crude, was seized on July 4 in a British Royal Navy operation off Gibraltar. The vessel was suspected of violating EU sanctions on oil shipments to Syria. Meanwhile, US inventories of the hydrocarbon commodity rose by 1.58 million barrels to 440.5 million barrels during the seven days ended Aug. 9, according to data published by the Energy Information Administration on Wednesday.  That compares with forecasts by industry experts compiled by S&P Global Platts expecting a 2.8 million-barrel draw last week while the American Petroleum Institute Tuesday night reported a surprise inventory build of 3.7 million barrels. Finally, the number of oil rigs operating in the US rose for the first time in seven weeks.  Data from Houston-based Baker Hughes (BHGE), an oil-field services company, showed the US oil rig tally rose six this week to 770. A year ago, the count was 869.

Light, sweet crude oil for September delivery rose 1.09% for the week, settling at $54.47 per barrel at the end of Friday’s session. In other energy futures, gasoline was down 0.57% over the last five days and settled at $1.64 per gallon on Friday. Natural gas logged an increase of 3.38% this week, ending Friday at $2.23 per 1 million British thermal unit.

The SummerHaven Dynamic Commodity Index Total Return Index (SDCITR) fell 1.56% for the week, compared with an increase of 1.44% in the prior week.

Gold finished Friday’s session edging lower, settling at $1,531.20 but once again benefitted from the downbeat economic backdrop to end the week 1.05% higher, as most investors resorted to safe-haven buying. On Wednesday the precious metal hit a new six-year high. The surge in US Treasury bills by Thursday and Friday, which sent yields lower, also helped bolster gains for the yellow metal. Meanwhile, copper prices ended the week down 0.23% and closed Friday at a settlement price of $2.60; earlier in the week copper had touched its lowest price in more than two years, continuing to be weighed by traders’ worries over the slowdown in global growth (and consequently, demand for industrial metals) as well as the protracted trade war between the US and China.

In agricultural commodities news, China’s Ministry of Agriculture and Rural Affairs has trimmed its soybean import forecast by 1.5 million tons to 83.5 million tons for the 2018-19 crop year, which runs from October to September of the following year, according to a statement on Monday. China has been the biggest consumer of the crop and the US is its biggest supplier. Data from China’s General Administration of Customs showed that soybean imports in January to July went down 11.2% to 46.9 million tons amid the country’s trade war with the US. Soybeans were down 1.57% for the week, and closed Friday in the green at $8.80 per bushel; corn for September delivery fell 8.69% in the week and settled at $3.81 per bushel in Friday’s session; and wheat slumped 4.70% and settled at $4.78 per bushel at the end of Friday’s session. Other commodities were lower: coffee was around $0.96 per pound at Friday’s close, down 1.23% for the week; cocoa was down 2.70% for the week and closed Friday’s session at $2,187 per tonne; and sugar had a weekly decline of 2.19% and settled at a price of $0.12 per pound on Friday.

 

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USO002033 Ex. 10/31/2019