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Weekly Commodities ETF Report: Crude Hits 3-Month High as OPEC+ Pledges to Cut Production; Gold Sinks as Dollar Jumps on Upbeat US Jobs Data

(MT Newswires) – Crude rose the highest in nearly three months on Friday as the Organization of the Petroleum Exporting Countries (OPEC) and Russia agreed to produce 500,000 barrels per day less oil in the first quarter of 2020. This was followed by Saudi Arabia’s announcement that it will produce 400,000 bpd below its OPEC quota to support prices and boost the value of Aramco, its state-controlled oil company. Meanwhile, the US Energy Information Administration (EIA) said oil inventories fell for the first time in six weeks. The EIA reported Dec. 4 that crude oil inventories fell by 4.9 million barrels for the week ended Nov. 29, well above an expected 700,000-barrel decline forecast by S&P Global Platts and reported by MarketWatch. The drop cut inventories to 447.1 million barrels, 3% above the five-year average. This compares with a decrease of 3.72 million barrels of crude oil reported by the American Petroleum Institute.  Finally, the number of oil rigs operating in the US declined for a seventh consecutive week to remain at their lowest level in more than two-and-a-half years. The US oil rig count fell by five to 663 in the week through Dec. 6, according to data compiled by energy services firm Baker Hughes (BKR). The total was the lowest since the week ended March 31, 2017, when 662 rigs were running. A year ago, there were 877 oil rigs in operation.

Light, sweet crude oil for January delivery rose 1.70% for the week, settling at $58.43 per barrel at the end of Friday’s session. In other energy futures, gasoline was up 2.90% over the last five days and settled at $1.62 per gallon on Friday. Natural gas was up 1.34% this week, ending Friday at $2.43 per 1 million British thermal unit.

The SummerHaven Dynamic Commodity Index Total Return Index (SDCITR) rose 1.37% this week, compared with a decline of 1.34% in the prior week.

Gold ended Friday in the red at $1,483.10 and the week 0.41% lower, pushed down as an unexpectedly strong US jobs report and a stronger dollar boosted investor appetite for risk. The drop came as the United States added 266,000 new jobs in November, well above expectations. The positive data convinced investors to move to equities and other risky assets and sell gold. The US dollar also pushed higher, making gold less affordable for international buyers. Copper prices, meanwhile, rose during Friday’s session, ending at a settlement price of $2.66 and closing the week 3.29% higher, in step with other industrial metals, on the back of optimism over the progress of the US-China interim trade deal. Concerns over the progress of the trade negotiations had been sparked by renewed tensions between the two countries after the signing of the pro-democracy Hong Kong bill as well as a bill proposing sanctions on Chinese officials over human rights violations against Uighur Muslims in China’s Xinjiang province. However, there have been reassurances that the phase one trade deal between the US and China will be signed soon, with media reports quoting US Treasury Secretary Steven Mnuchin as saying that negotiations for an initial trade agreement were “progressing.” On Thursday, Reuters quoted Mnuchin as saying that talks between Washington and Beijing for an initial agreement were “on track,” though the Trump administration does not have a deadline on when to finalize the deal.

In agricultural commodities news, China reportedly began a process of removing import tariffs on certain types of US agricultural products, as part of its efforts to facilitate a partial trade deal with the US before new levies are imposed by Dec. 15. Xinhua News Agency said in a report that the State Council in China has kicked off the process that would exempt US exports of soybeans and pork from Chinese import levies. President Donald Trump, who is demanding China purchase $40 billion to $50 billion of US agricultural products annually, will decide by Dec. 15 whether more tariffs will be slapped on $156 billion of goods imported from China if the phase-one deal fizzles out. China is calling on the US to roll back import penalties it has levied over the past 16 months to bring about a trade agreement with the world’s second-largest economy. Among grains, soybeans ended the week 1.43% higher, closing Friday’s session at $8.90 per bushel; corn was down 1.18% for the week, settling Friday at a price of $3.77 per bushel; and wheat ended the week down 3.32%, closing the Friday session at a price of $5.25 per bushel. Other commodities were higher:  sugar had a weekly increase of 2.01% and settled at a price of $0.13 per pound on Friday; cocoa was up 2.43% for the week and closed Friday’s session at $2,607 per tonne; and coffee was around $1.25 per pound at Friday’s close, up 4.07% for the week.


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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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USO002079 Ex. 1/31/2020