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Weekly Commodities ETF Report: Crude Trims Weekly Gains on Lower Production Cuts From Russia; Gold Ends August at Six-Year High

(MT Newswires) – Crude ended Friday’s session higher but trimmed its gains for the whole week, following news that Russia will reduce its crude output by a lower-than-agreed-upon volume under its deal with the Organization of the Petroleum Exporting Countries (OPEC).  For its part, OPEC’s own plans to continue with its production curbs to support crude prices have been undermined. A survey by Reuters has shown that crude production by OPEC member countries and the group’s allies rose in August, despite the organization renewing its commitment to curb output back in July. Higher supply from Iraq and Nigeria offset the reduced exports from Saudi Arabia, as well as from sanction-hit Iran. Back home, US inventories of crude decreased by 10 million barrels through Aug. 23 to 427.8 million barrels, meeting the five-year average for this time of year, according to data from the Energy Information Administration. That was narrower than the 11.1 million barrels projected by the American Petroleum Institute late Tuesday but was bigger than the draw of 2.7 million barrels posed the previous week.  Finally, the number of oil rigs operating in the US for the week dropped to the lowest since early January of last year.  Data from Houston-based Baker Hughes (BHGE), an oil-field services company, showed the US oil-rig tally dropped 12 on the week to 742. A year ago, the count was 862.  The week’s print was the lowest since another tally of 742 was reported in the week ended Jan. 5, 2018.

Light, sweet crude oil for October delivery rose 2.04% for the week, settling at $56.71 per barrel at the end of Friday’s session. In other energy futures, gasoline was down 0.07% over the five-day period and settled at $1.57 per gallon on Friday. Natural gas logged an increase of 5.60% for the week, ending Friday at $2.30 per 1 million British thermal unit.

The SummerHaven Dynamic Commodity Index Total Return Index (SDCITR) rose 1.66% for the week, compared with an increase of 0.07% in the prior week.

Gold finished Friday’s session edging lower, settling at $1,536.90 to end the week down 0.31%. However, the yellow metal closed the month of August in positive territory — the fourth straight month of gains — hitting a six-year high earlier in the week. Lower interest rates from different countries’ central banks and uncertainty surrounding the ongoing trade spat between the US and China, as well as negative yields of treasury notes, have helped boost gold’s safe-haven appeal. Meanwhile, copper inched 1.11% higher during the week, despite weak global cues, with the red metal closing Friday at a settlement price of $2.58. Again, the slowdown in manufacturing around the world and a weaker yuan has been weighing on the industrial metal’s prices. But positive developments in the protracted Sino-American trade war helped lift prices somewhat. Last week, China softened its trade stance and said it is willing to renew trade negotiations with the US and resolve the dispute with a “calm attitude.”

In agricultural commodities news, corn ended Friday and the week higher but saw its biggest monthly decline in four years, as farms in the American Midwest are seeing excellent weather that has helped crop development. This has, in turn, led to forecasts for higher crop yields. The International Grains Council boosted its outlook for global corn production in the 2019/2020 season by 8 million tonnes to 1.1 billion tonnes. Among grains, corn for September delivery inched 0.54% higher in the week and settled at $3.70 per bushel in Friday’s session; soybeans were up 1.58% for the week, and closed Friday  at $8.69 per bushel; and wheat fell 3.30% and settled at $4.63 per bushel at the end of Friday’s session. Other commodities were mixed: coffee was around $0.97 per pound at Friday’s close, up 1.47% for the week; cocoa was down 0.58% for the week and closed Friday’s session at $2,222 per tonne, and sugar had a weekly decline of 2.62% and settled at a price of $0.11 per pound on Friday.


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USO002035 Ex. 10/31/2019