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Weekly Commodities ETF Report: Crude Continues Slump as Lockdowns Around the World Weigh on Demand; Gold Ends Higher on Stimulus Measures

(MT Newswires) – Oil prices fell on Friday as lockdowns to check the spread of COVID-19 continue to cut demand for fuel. The US and other industrialized nations ordered large sections of their economies to be shut down to slow the respiratory disease. The death toll and infections worldwide have more than doubled in the past week, according to data from Johns Hopkins University. On Friday, the data showed more than 26,800 people have died and more than 585,000 have been infected since the coronavirus that causes the disease emerged from China late last year. The House of Representatives on Friday passed a $2 trillion relief bill that will provide payments and loans to workers and businesses in the US that have been hit hard by the pandemic. The Senate approved the measure on Wednesday, and Trump is expected to sign the bill into law immediately.

The ongoing price war between Saudi Arabia and Russia has also weighed on the commodity, with the latter refusing to agree to production cuts that the kingdom and the Organization of the Petroleum Exporting Countries have been seeking in response to declining global demand due to COVID-19.

Meanwhile, Fatih Birol, head of the International Energy Agency said oil use could be down by as much as 20% because of the quarantines and travel restrictions. “Birol announced (Thursday) that oil demand could decline by as much as 20 million barrels per day, or 20%, this year given that three billion people around the world are locked down. Then there is OPEC’s price war with the other oil producers, with Saudi Arabia and its allies already intending to raise their production by over 3 million barrels per day in April. Birol therefore called upon Saudi Arabia not to increase production any further and to help stabilize the oil market,” Eugen Weinberg, Commerzbank’s head of commodity research, said in a note.

On Wednesday, the US Energy Information Administration (EIA) said that crude stockpiles surged by 1.6 million barrels over a week to March 20. That compares with a forecast for a 2.8 million-barrel jump in a Reuters’ poll of analysts. And separately, the count for oil in the US fell by 40 rigs to 624 in the week through Friday, the lowest since the week ended March 10, 2017, according to data compiled by energy-services firm Baker Hughes (BKR). A year ago, the US had 816 oil rigs in operation.

Light, sweet crude oil for May delivery rose 8.77% for the week but settled down at $22.60 per barrel at the end of Friday’s session. In other energy futures, gasoline was down 0.88% over the five-day period and settled at $0.60 per gallon on Friday. Natural gas ended the week up 5.90%, settling at $1.69 per 1 million British thermal unit at the end of Friday’s session.

The SummerHaven Dynamic Commodity Total Return Index (SDCITR) rose 3.64% on the week, compared with a decrease of 0.21% in the prior week.

Gold prices fell along with stocks on Friday, settling at a price of $1,651.20, even as the US dollar weakened, following news that the House of Representatives voted to approve a $2 trillion stimulus package. The stimulus “will massively increase the US national debt,” Commerzbank analyst Carsten Fritsch said in a research note. “In addition, there are the unlimited bond purchases by the US Federal Reserve. All these measures will result in a surge in the supply of US dollars, which is effectively a debasement of paper currencies. It is obvious that gold – an alternative currency that cannot be reproduced at will – will profit from this unprecedented orgy of money-printing, even if it experiences some short-term price fluctuations.” Ultimately,  the yellow metal ended the week higher, up 8.23%.

Copper ended Friday’s session slightly lower, with a settlement price of $2.18, while gaining 0.79% for the week, as traders were cautiously optimistic following several stimulus initiatives from major countries in response to the COVID-19 pandemic. Gains were dampened, however, by lockdowns around the world, which are expected to impact the red metal’s demand forecast.

In agricultural commodities, soybean futures closed the Friday session higher at $8.82 per bushel, up 2.35% for the week. The higher prices were brought on by worries that production will slow down due to the new coronavirus outbreak. Among other grains, wheat futures ended this week up 6.02%, closing the Friday session at a price of $5.71 per bushel; and corn futures were up 0.95% for the week, settling at a price of $3.46 per bushel on Friday.

Other agricultural commodities were mixed: sugar had a weekly increase of 1.83% and settled at a price of $0.11 per pound on Friday; coffee was around $1.16 per pound at Friday’s close, down 3.13% for the week; and cocoa was up 1.90% for the week and closed Friday’s session at $2,257 per tonne.



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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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USO002158 Ex. 6/30/200