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Weekly Commodities ETF Report: Crude Ends Lower on WTO Downgrade of Trade Growth Forecast, Weak Manufacturing and Services Data; Gold Rescued by Lukewarm Jobs Data

(MT Newswires) – Crude ended Friday’s session higher but closed the week lower, as pressure on oil producers increased after the World Trade Organization (WTO) said earlier in the week escalating trade tensions and a slowing global economy have led its economists to “sharply downgrade” forecasts for trade growth in 2019 and 2020.  The energy market was also undermined by pessimism emanating from the service and manufacturing sectors.  On Tuesday, the Institute for Supply Management (ISM) reported manufacturing data that came in at the worst level since after the financial crisis in 2009.  The ISM said manufacturing activity fell by 1.3 points to 47.8% — below the 50% print expected in a survey of economists by Econoday. Expansion in the services sector also slowed sharply from August. Meanwhile, commercial crude stockpiles increased for a third consecutive week in a build that was bigger than the previous period. The Energy Information Administration said the inventories rose by 3.1 million barrels through Sept. 27 to reach 422.6 million barrels. A week earlier, the stockpiles were up 2.4 million barrels. The American Petroleum Institute on Tuesday reported a 5.9 million-barrel drop in crude oil stocks. And data compiled by Baker Hughes (BHGE) showed the number of oil rigs operating in the US fell by three to 710 in the week ended on Oct. 4, declining for the seventh consecutive week to the lowest level since May 2017. The combined oil and gas rig count in the US dropped by five to 855 as gas rigs fell by two to 144.

Light, sweet crude oil for November delivery fell 5.93% for the week, settling at $52.45 per barrel at the end of Friday’s session. In other energy futures, gasoline was down 2.29% over the last five days and settled at $1.56 per gallon on Friday. Natural gas was down 1.67% on the week, ending Friday at $2.33 per 1 million British thermal unit.  

The SummerHaven Dynamic Commodity Index Total Return Index (SDCITR) fell 0.49% for the week, compared with a decline of 0.46% the prior week.

Gold was in the red at the end of Friday’s session, although it maintained a level above $1,500, closing at $1,513.80, following optimistic comments from President Donald Trump regarding next week’s US-China trade talks. However, the yellow metal ultimately rose for the week, up 0.46% after a mixed employment situation report.  September nonfarm payrolls rose 136,000 versus the 145,000 expected and the unemployment rate fell to 3.5%, the lowest since 1969 against an expected and prior 3.7%. While the numbers were arguably tepid at best and helped temper rising worries of a deeper slowing in global economic growth, they were not enough to offset disappointing manufacturing and private employment data out earlier in the week.  Meanwhile, copper ended the week down 1.35% and closed Friday at a settlement price of $2.55, due mostly to low trading volumes from China — the largest copper consumer — with markets closed for most of the week to celebrate the 70th anniversary of Communist Party rule with the founding of the People’s Republic of China.

In agricultural commodities, the US Department of Agriculture (USDA) reported on Thursday that export sales of US soybeans for the week ending Sept. 26 were at 2.076 million metric tons, above trade insiders’ expectations for 900,000 to 1.4 million metric tons. The USDA also confirmed private sales of 252,000 metric tons of US soybeans to China for shipment in the 2019/2020 marketing year. Soybeans were up 3.74% for the week, and closed Friday at $9.16 per bushel. Among other grains, wheat ended the week up 0.77%, closing the Friday session at a price of $4.90 per bushel; and corn for December delivery rose 3.49% in the week and settled at $3.85 per bushel in Friday’s session. Other commodities were mixed: coffee was around $0.99 per pound at Friday’s close, down 1.99% for the week; cocoa was down 0.48% for the week and closed Friday’s session at $2,475 per tonne; and sugar had a weekly increase of 1.19% and settled at a price of $0.13 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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USO002060 Ex. 12/31/2019