(MT Newswires) – Crude prices fell Friday as markets continued to assess the impact of the new coronavirus on oil demand. A technical panel from the Organization for the Petroleum Exporting Countries and other producers, known as OPEC +, recommended an additional cut of 600,000 barrels per day in oil output in response to the possible slump in oil demand in the wake of the coronavirus outbreak. Russian Energy Minister Alexander Novak said Friday that he sees demand dropping by 150,000 to 200,000 barrels per day but does not expect a decline in demand from China for Russian oil and gas. He also added that his country would need a few days to study the oil market before committing to deeper production cuts. Sources also said that OPEC+ ministers haven’t yet decided whether to bring forward their upcoming policy meeting to February from early March.
Inventories of US crude rose for a second straight time last week, adding 3.4 million barrels to 435 million barrels in the week ended Jan. 31, according to data published by the Energy Information Administration. That’s about 2% below the five-year average for this time of year. A week earlier the stockpiles climbed 3.5 million, the government figures showed. Finally, the number of oil rigs operating in the US rose by one rig to 676 in the week through Friday, according to data compiled by energy services firm Baker Hughes (BKR). A year ago, the US had 854 oil rigs working.
Light, sweet crude oil for March delivery fell 2.29% for the week, settling at $50.95 per barrel at the end of Friday’s session. In other energy futures, gasoline was up 1.74% over the previous five days and settled at $1.50 per gallon on Friday. Natural gas was up 0.38% for the week, ending Friday at $1.86 per 1 million British thermal units.
The SummerHaven Dynamic Commodity Index Total Return Index (SDCITR) rose 0.73% for the week, compared with a decline of 2.61% in the prior week.
Gold closed the Friday session higher at $1,570.00, as investors took profits and cut their risk by shedding stocks and moving to gold’s safe haven, following news that the Chinese have taken steps to halt the spread of the coronavirus, which had been expected to lower growth in the country and globally. However, the yellow metal ended the week slipping 1.24% lower as the US dollar rose, making gold less affordable for international buyers.
On the other hand, copper was in the red Friday, with a settlement price of $2.59 but ultimately ending up 1.47% for the week. The red metal has been taking a beating in the past few weeks, as worries for a slowdown in demand had been exacerbated by the impact of the coronavirus on China’s commerce and industry. But despite the uncertainties, there have been some bright spots for copper, as China — the biggest consumer of raw commodities — recently said that it will reduce by 50% additional tariffs on some US exports to the country, which were part of the $75 billion of US goods that were imposed with retaliatory tariffs on Sept. 1, 2019, according to the Customs Tariff Commission of the State Council. These include tariffs on US-sourced metals and metal products, such as copper diodes.
Similarly, sentiment around agricultural commodities brightened following China’s announcement, with soybean prices among the biggest winners following expectations for the East Asian country to increase its purchases. The Chinese Ministry of Commerce had said that it will use the imports to help increase the country’s supply of meat and other farm produce in the domestic markets. The Customs Tariff Commission, meanwhile, said that the move to halve the tariffs on US imports aims to promote healthy and stable development of Sino-US economic and trade relations. An unnamed Chinese official, however, said the tariff reduction was in response to the US’ planned elimination of 15% in additional duties on $120 billion of Chinese goods that will also take effect Feb. 14, Xinhua News Agency reported Thursday. The official added, “Further adjustment will mainly depend on future development in the economic and trade relations between the two countries.”
Among grains, soybeans rose 1.15% for the week and closed the Friday session at $8.82 per bushel; corn rose 0.33% and settled Friday at a price of $3.84 per bushel; and wheat ended the week up 1.04%, closing the Friday session at a price of $5.59 per bushel. Other commodities were mixed: sugar had a weekly increase of 2.75% and settled at a price of $0.15 per pound on Friday; coffee was around $0.98 per pound at Friday’s close, down 3.28% for the week; and cocoa was up 4.52% for the week and closed Friday’s session at $2,898 per tonne.
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USO002136 Ex. 3/31/2020