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Weekly Commodities ETF Report: Crude Ends Week Higher Despite Jump in OPEC Output; Progress in US-China Trade War Deflates Safe-Haven Buying in Gold

(MT Newswires) – Crude ended both Friday’s session and the week higher as a decline in the US oil rig count and crude inventories overshadowed the results of a closely watched survey of the Organization of the Petroleum Exporting Countries’ (OPEC) output.  The latest S&P Global Platts survey showed that the average daily output from OPEC increased by 50,000 barrels per day to 29.93 million barrels per day in August. With this rise in output, OPEC’s overall compliance fell to 103% among the 11 members with output caps, from 117% in July, according to the Platts calculations. The increase in the 14-member cartel’s output reflected Iraq, OPEC’s second-largest oil producer, reaching its highest-ever production count in August, with an output of 4.88 million barrels per day. The output in August was, however, 930,000 barrels per day lower than the average production in January, which is consistent with OPEC’s policy of cutting 1.2 million barrels per day of output to help stabilize the global energy market. While OPEC pushed up production last month, the US oil rig count fell for eight weeks over the past 10. Data compiled by Baker Hughes (BHGE) showed the number of oil rigs operating in the US fell by four to 738 during the week that ended Sept. 6, the lowest level since November 2017. The combined oil and gas rig count in the US dropped by six to 898 as gas rigs fell by two to 160. Along with rig counts, the US crude inventory also contracted more than expected. On Wednesday, the Energy Information Administration said its weekly crude inventory count fell by 4.7 million barrels — higher than expectations for 4 million barrels, according to Bloomberg data. It also compares with the 401,000-barrel increase in crude supplies reported by the American Petroleum Institute earlier in the week.

Light, sweet crude oil for October delivery rose 2.54% for the week, settling at $56.30 per barrel at the end of Friday’s session. In other energy futures, gasoline was up 2.99% over the last five days and settled at $1.55 per gallon on Friday. Natural gas jumped 9.21% this week, ending Friday at $2.44 per 1 million British thermal unit.

The SummerHaven Dynamic Commodity Index Total Return Index (SDCITR) increased 0.16% this week, compared with an increase of 1.66% in the prior week.

Gold rose to touch a six-year high earlier in the week due to safe-haven buying, with investors concerned over trade tensions between the US and China, as the latest round of tariff increases between the two countries took effect on Sept. 1. China had also announced that it filed a case with the World Trade Organization against the US concerning those additional tariffs. However, by the end of the week, gold had lost much of its safe-haven luster after the chief trade negotiators for both sides scheduled economic and trade consultations for early October.  In a phone conversation between Chinese Vice Premier Liu He and US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin, both countries agreed to what will be the 13th round of high-level trade negotiations between the two countries. The yellow metal finished Friday’s session edging lower, settling at $1,525.50 to end the week down 0.99%.  Meanwhile, copper also started off the week higher following China’s announcements about stimulus measures that would help support its slowing economy, including increases in its infrastructure spending, which in turn could eventually boost demand for copper. Gains for the red metal continued throughout the next five days as trade negotiations between the US and China were set to resume by next month. Copper ended the week up 2.76% and closed Friday at a settlement price of $2.64.

In agricultural commodities, soybeans gave up gains stemming from the thaw in the US-China trade dispute following news of increased supplies both in the US and around the world. Forecasts for large harvests in South America, coupled with weak export demand, also weighed on prices. Soybeans were down 1.27% for the week, and closed Friday at $8.58 per bushel.  Among other grains, corn for September delivery fell 3.66% in the week and settled at $3.56 per bushel in Friday’s session; and wheat inched 0.27% higher and settled at $4.64 per bushel at the end of Friday’s session. Other commodities were also mixed: coffee was around $0.97 per pound at Friday’s close, up 0.31% for the week; cocoa was up 2.62% for the week and closed Friday’s session at $2,277 per tonne; and sugar had a weekly decline of 1.43% and settled at a price of $0.11 per pound on Friday.


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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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USO002041 Ex. 10/31/2019