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Weekly Commodities ETF Report: Crude Sinks on Oversupply Worries; Gold Takes a Hit, Commodities Rise on Progress in US-China Trade Spat

(MT Newswires) – Crude ended both Friday’s session and the week lower amid worries about a glut of supplies. The International Energy Agency warned of a surge in production from countries that are outside the Organization of the Petroleum Exporting Countries (OPEC), saying a “significant surplus” in 2020 will pile pressure on oil prices. The agency said Thursday that output was growing “strongly” on an annual basis, rising this year by 1.25 million barrels per day, with 1 million barrels per day of growth set to come in 2020. Back home, stockpiles of crude fell by 6.9 million barrels from the previous week to 416.1 million and are about 2% below the five-year average for this time of year. A week ago, the inventories were down by 4.8 million barrels, according to data from the Energy Information Administration. The result was in between expectations, with the American Petroleum Institute looking for a draw of about 7.2 million barrels, according to reports, while the analysts surveyed by S&P Global Platts were expecting a decline of 3.6 million barrels. Also, the number of oil rigs operating the US fell to the lowest level in almost two years for the week. The crude equipment tally dropped by five to 733 in the week through Friday, the fourth straight weekly decrease and resulting in the fewest working since the week ended Nov. 3, 2017, data from Houston-based energy services firm Baker Hughes (BHGE) showed. A year ago, there were 867 oil rigs operating.

Light, sweet crude oil for October delivery fell 3.17% for the week, settling at $55.09 per barrel at the end of Friday’s session. In other energy futures, gasoline was down 1.45% over the last five days and settled at $1.55 per gallon on Friday. Natural gas was up 5.30% on the week, ending Friday at $2.57 per 1 million British thermal unit.

The SummerHaven Dynamic Commodity Index Total Return Index (SDCITR) rose 0.35% this week, compared with an increase of 0.16% in the prior week.

Gold fell below the psychological $1,500 per ounce mark during the week, slipping 1.27% and closing Friday’s session at $1,507.40 as positive developments in the protracted trade dispute between the US and China helped boost market sentiment.  US President Donald Trump moved the effective date of tariffs on $250 billion of Chinese exports to the US to Oct. 15, at the request of Chinese Vice Premier Liu He. Trump said on Twitter that the delay is a “gesture of goodwill” as China is set to celebrate its 70th anniversary on Oct. 1. Additional tariffs of 25% to 30% were supposed to take effect Oct. 1. China, for its part, is encouraging its companies to buy US pork and other farm products. Also, expectations of an interest-rate cut in the US were emboldened following the European Central Bank’s decision to restart its quantitative easing program. Meanwhile, copper was in positive territory, ending the week up 2.66% and closed Friday at a settlement price of $2.64 — the highest in more than a month. Gains came on the back of spot demand during the week, as well as the positive reaction to the progress in the Sino-US trade war, sparking some cautious expectations that this will eventually increase demand for industrial metals.

In agricultural commodities news, Chinese companies have started to inquire about prices of farm products from the US, according to a Friday report on Reuters, citing a Chinese Ministry of Commerce spokesman. The potential purchases include pork and soybeans. The move is part of the concessions that both the US and China are implementing in order to move along their trade negotiations, with the next face-to-face meeting between negotiators set in October. An earlier Reuters report said Chinese private firms already made orders for more than 600,000 tonnes of soybeans from the US, which are due to be shipped out between October and December. This is the largest order from China since June 2018.  Soybeans were up 4.75% for the week and closed Friday at $8.99 per bushel.  Among other grains, corn for December delivery jumped 3.87% in the week and settled at $3.69 per bushel in Friday’s session; and wheat rose 4.38% higher and settled at $4.84 per bushel at the end of Friday’s session. Other commodities were also higher: coffee was around $1.03 per pound at Friday’s close, up 5.78% for the week; cocoa was up 2.33% for the week and closed Friday’s session at $2,337 per tonne; and sugar had a weekly increase of 8.45% 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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USO002046 Ex. 10/31/2019