(MT Newswires) – Crude oil prices ended higher on Friday, edging up after dropping by nearly a third in a week but ended the week with the steepest slump since 2008 amid a price war between Saudi Arabia and Russia, the two biggest producers in the world, and prospects for a supply glut as the countries move to produce more oil. The commodity saw its worst week since the 2008 financial crisis after Saudi Arabia responded to the collapse of talks between the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers led by Russia by boosting output to record levels.
Oil is likely to remain under pressure as Europe takes the baton from China to become the epicenter of the coronavirus pandemic, undermining crude demand further. Uncertainty also surrounds the extension of the 1.7 million barrels per day of cuts that OPEC+ is mandated to implement until the end of March, implying higher production by cartel members in the months ahead.
On Wednesday, the Energy Information Administration said US crude stockpiles increased by 7.7 million barrels from the previous week. At 451.8 million barrels, inventories were about 2% below the five-year average for this time of year. A week earlier, stockpiles rose by 785,000 barrels. Finally, the number of oil rigs rose by one rig to 683, the highest since the week ending Dec. 20, according to data compiled by energy-services firm Baker Hughes (BKR). A year ago, the US had 833 oil rigs in operation.
Light, sweet crude oil for April delivery fell 20.50% for the week, settling at $31.50 per barrel at the end of Friday’s session. In other energy futures, gasoline was down 33.35% over the five-day period and settled at $0.90 per gallon on Friday. Natural gas ended the week up 9.82%, settling at $1.84 per 1 million British thermal unit at the end of Friday’s session.
The SummerHaven Dynamic Commodity Total Return Index (SDCITR) fell 7.16% for the week, compared with a decrease of 2.52% in the prior week.
Gold prices fell for the fourth-straight session, settling at a price of $1,590.30 on Friday, and down 5.84% for the week, as stock markets pushed up from their day-prior crash but investors still sought to liquidate the metal to make up for losses. Earlier in the week, the yellow metal reached over $1,700, with gains coming on the back of a decline in 10-year US Treasury yields, which plunged to record lows. However, gold had since declined over the following days. “We attribute gold’s weakness to further forced selling in order to meet margin calls on other markets, especially stock markets. Many stock markets chalked up historic losses yesterday. Gold is highly liquid, which makes it the go-to asset in such cases,” Commerzbank analyst Daniel Briesemann said in a report.
Copper was lower on Friday, with a settlement price of $2.47, and fell 4.39% for the week. Analysts have seen the red metal fare better than other commodities such as oil amid the spread of the coronavirus, although it has been trading down more than 11% from a recent high in January. Copper, which is seen as a major indicator for economic activity, was initially hit as China grappled with COVID-19 cases as it was closely linked to the East Asian country’s manufacturing sector.
Agricultural commodities saw major weekly declines as concerns over the impact of the coronavirus outbreak on global economies continued. Corn futures fell 2.59% for the week, settling at a price of $3.66 per bushel on Friday. Soybean futures closed the Friday session lower at $8.49 per bushel, down 4.75% for the week. Wheat futures ended the week down 1.65%, closing the Friday session at a price of $5.06 per bushel.
Other agricultural commodities were also lower: sugar had a weekly decline of 10.98% and settled at a price of $0.12 per pound on Friday; coffee was around $1.07 per pound at Friday’s close, down 0.47% for the week; and cocoa was down 6.63% for the week and closed Friday’s session at $2,425 per tonne.
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