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Weekly Commodities ETF Report: Crude, Gold Surge as Middle East Tensions Rise Following Death of Top Iranian General in US Forces Assault in Iraq

(MT Newswires) – Crude surged higher Friday, closing at $61.18. and rounding out the week with gains of 2.04%, following the overnight killing of Iran’s top military commander in a US drone strike outside Baghdad. The US said late Thursday that it killed Gen. Qassem Soleimani in an airstrike near the airport in Iraq’s capital city. Secretary of State Mike Pompeo told CNN on Friday morning that the killing of Soleimani “saved American lives” and was based on intelligence about an “imminent” attack in the region. Soleimani was the head of Iran’s elite military Quds force and was widely seen as the Islamic Republic’s second most powerful figure after Supreme Leader Ayatollah Ali Khamenei. Khamenei vowed “severe revenge” for Soleimani’s death in a message on Twitter.

The Energy Information Administration reported US crude inventories decreased for a third straight week, moving back in line with the five-year average of this time of year and aiding the day’s rally in crude prices. Data on Friday showed inventories were down 11.5 million barrels for the week through Dec. 27 to 429.9 million barrels. The figures were released later than usual due to the New Year’s holiday on Wednesday. Finally, the number of oil rigs operating in the US fell for a second straight week, while a decline in the tally for gas equipment sent the count for that commodity to the lowest since late 2016. The number of oil rigs in the US fell by seven to 670 in the week through Friday, according to data compiled by energy services firm Baker Hughes (BKR). That adds to the retreat of eight rigs from the previous week, the data showed. A year ago, the US had 877 oil rigs in operation.

In other energy futures, gasoline was up 1.19% over the five days to Friday and settled at $1.70 per gallon on Friday. Natural gas was down 3.50% on the week, ending Friday at $2.12 per 1 million British thermal unit.

The SummerHaven Dynamic Commodity Index Total Return Index (SDCITR) declined 0.18% this week, compared with an increase of 1.76% in the prior week.

Gold rose to the highest in four months on Friday, closing at $1,528.10 and with a weekly gain of 3.14% as investors moved away from risky assets in the wake of the US assassination of Soleimani in a missile attack near Baghdad.  Meanwhile, the flare up in tensions in the Middle East has weighed on copper, with prices for the red metal declining during Friday’s session, ending at a settlement price of $2.83 but closed the week 1.52% lower. Analysts have also cited weak demand in the spot market.

In agricultural commodities news, soybeans have logged a fifth consecutive weekly gain, ending the week 0.45% higher, closing Friday’s session at $9.42 per bushel. Optimism is still high, with traders expecting more purchases from China especially with the signing of the interim trade deal, which the Trump administration announced Tuesday. US President Donald Trump said he will sign the phase-one trade deal with China Jan. 15, a little over a month after the two sides reached an agreement. According to the US leader’s tweet, the signing of the trade deal will take place in the White House, with the presence of high-level Chinese officials. He added that he will travel to Beijing soon to start the negotiations for the second phase of the trade deal. China has yet to release its own statement on the trade deal signing.

Among other grains,  corn fell 0.64% on the week, settling Friday at a price of $3.87 per bushel; and wheat ended the week up 2.63%, but closed down in Friday’s session at a price of $5.55 per bushel. Other commodities were mixed:  sugar had a weekly decline of 0.52% and settled at a price of $0.13 per pound on Friday; coffee was around $1.26 per pound at Friday’s close, down 2.35% for the week; and cocoa was up 3.66% for the week and closed Friday’s session at $2,519 per tonne.

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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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USO002108 Ex. 2/29/2020