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Weekly Commodities ETF Report: Crude Careens Lower, Gold Makes Modest Gains Following China’s New Tariff Threat, Uncertainty Over Fed’s Interest Rate Path

(MT Newswires) – Crude ended both Friday’s session and the week lower, amid a backdrop of trade war fears, and general risk-off conditions. China had unveiled retaliatory tariffs against the US, saying that it is going to impose tariffs ranging from 5% to 10% on $75 billion of US goods in two batches, effective from Sept. 1 and Dec. 15. The Chinese State Council added it will resume duties on American autos, which will include a 25% tariff on US cars and a 5% tariff on auto parts, effective Dec.15.  Also included in China’s list of goods subject to tariffs is US crude oil, which will get a 5% tariff. Following the announcement, US President Donald Trump had lashed out at Beijing and vowed a quick response to China’s plans for new tariffs while ordering American companies to leave the country. The blistering Twitter screed called into doubt chances for a quick resolution to the escalating trade war between the world’s economic superpowers, which by the end of the year will cover nearly all imports and exports exchanged between the two countries.

Meanwhile, US inventories of crude decreased by 2.7 million barrels to 437.8 million barrels through Aug. 16, the Energy Information Administration said on Wednesday. A week ago, the stockpiles rose by 1.6 million barrels and the draw was less than the American Petroleum Institute was reportedly predicting for a drop of 3.5 million barrels. The stockpiles are at about 2% above the five-year average for this time of year, down from 3% a week earlier, the government data showed. Finally, the number of oil rigs operating in the US for the week dropped to a 19-month low. Data from Houston-based Baker Hughes (BHGE), an oil-field services company, showed the US oil-rig tally dropped 16 this week to 754. A year ago, the count was 860. This week’s print was the lowest since 747 rigs were reported in the week ended Jan. 12, 2018.

Light, sweet crude oil for September delivery fell 1.88% for the week, settling at $55.35 per barrel at the end of Friday’s session. In other energy futures, gasoline was down 7.92% over the last five days and settled at $1.55 per gallon on Friday. Natural gas logged a decrease of 1.91% for the week, ending Friday at $2.16 per 1 million British thermal unit.

The SummerHaven Dynamic Commodity Index Total Return Index (SDCITR) rose 0.07% this week, compared with a decline of 1.56% in the prior week.

Gold finished Friday’s session edging higher, settling at $1,508.50 to end the week up 0.86 %. The yellow metal extended its gains as uncertainty over the Federal Reserve’s monetary policy drove most investors to safe-haven trading. Federal Reserve Chair Jerome Powell failed to offer hints of aggressive interest-rate cuts after his much-awaited speech at Jackson Hole, Wyo. He did not provide any clear clues on rates but reiterated the Fed will “act as appropriate to sustain the expansion,” and said the economy is in a “favorable place.” He also said the US faces “significant risks,” including Brexit and Hong Kong unrest, along with weakness in China and Germany. Conversely, copper prices ended the week down 2.30% and closed Friday at a settlement price of $2.56 as Powell’s comments and concerns over the worsening Sino-US trade war weighed on the red metal. A slowdown in China’s economic growth, as well as a weaker yuan, also dragged on the demand for copper.

In agricultural commodities news, an official from the US Department of Agriculture said Thursday that China had purchased only half of the US soybeans it had promised to import earlier this year. The report came a day before China announced its new tariffs, which will be imposed on US soybeans, lobsters, peanut butter and other imports. Specifically, the commodity will face a 5% tariff. Soybeans were down 2.73% for the week, and closed Friday in the red at $8.57 per bushel; corn for September delivery fell 3.67% in the week and settled at $3.68 per bushel in Friday’s session; and wheat inched 0.10% higher and settled at $4.78 per bushel at the end of Friday’s session. Other commodities were mixed: coffee was around $0.96 per pound at Friday’s close, down 1.14% for the week; cocoa was up 1.46% for the week and closed Friday’s session at $2,238 per tonne; and sugar had a weekly decline of 1.38% and settled at a price of $0.11 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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USO002033 Ex. 10/31/2019