(MT Newswires) – Crude ended Friday’s session higher, supported by expectations of more output cuts from the Organization of the Petroleum Exporting Countries (OPEC) and its allies. Russia had said that it extended an output reduction deal with OPEC, while Saudi Arabia, the de facto leader of the organization, plans to maintain its crude oil exports below 7 million barrels per day (bpd) in August and September. However, crude ultimately ended the week lower, weighed by the report from the International Energy Agency (IEA) that demand growth for oil was at its lowest since 2008. The worsening of the trade relationship between the US and China led the IEA to cut its estimates for oil demand growth in 2019 and 2020 by 0.1 million barrels per day (mb/d) to 1.1 mb/d and 1.3 mb/d, respectively. The IEA said its revised outlook takes into account the International Monetary Fund’s recent lowering of the economic outlook, while noting the health of the global economy had become “even more uncertain.” Meanwhile, US inventories of the hydrocarbon commodity rose by 2.4 million barrels to 438.9 million barrels in the week ended Aug. 2, according to data published by the Energy Information Administration on Wednesday. This was a surprise gain, as the American Petroleum Institute had forecast a drop of 3.4 million barrels on Tuesday. It also contrasted with an 8.5 million-barrel decline in US inventories of crude oil seen the week earlier. Finally, the number of oil rigs operating in the US fell by six to 764 during the week that ended Aug. 9, the lowest level since Feb. 2, 2018, according to data compiled by energy services firm Baker Hughes (BHGE). The combined oil and gas rig count in the US was down by eight to 942 as gas rigs fell by two to 169.
Light, sweet crude oil for September delivery fell 1.40% for the week, settling at $52.54 per barrel at the end of Friday’s session. In other energy futures, gasoline was down 5.77% over the last five days and settled at $1.65 per gallon on Friday. Natural gas logged a decrease of 0.84% this week, ending Friday at $2.13 per 1 million British thermal unit.
The SummerHaven Dynamic Commodity Index Total Return Index (SDCITR) rose 1.44% this week, compared with a decline of 2.64% in the prior week.
Gold finished Friday’s session slightly weaker but managed to stay at $1,509.50 — above the psychologically important level of $1,500. It also closed the week 3.89% higher — at its best level since a 4.14% rise on June 21, according to FactSet data. The yellow metal began the week in positive territory, benefitting from its safe-haven status as US equities saw their worst day of the year on Monday, following the worsening of the Sino-US trade war, when the benchmark indexes declined some 3%. Meanwhile, copper prices ended the week up 0.97% but closed Friday lower at $2.61 per pound. This was a modest comeback from Monday, when the red metal slumped to the lowest level since June 2017. The protracted trade war between China and the US has dampened demand and pushed prices ever lower for copper — which some analysts consider a barometer of the global economy because it is used in home and commercial construction.
Agriculture commodities, particularly grains, were higher ahead of the US Department of Agriculture (USDA) monthly supply and demand report, which will be released Aug. 12. Soybeans logged mild gains despite being pressured by trade war woes. Earlier this week, China said it will stop ordering US farm goods — including soybeans — due to the 10% tariff hike the US will impose on $300 billion of Chinese exports in September. The East Asian country also said it may place tariffs on American farm products. Meanwhile, worries about the condition of US corn has helped support prices for the grain, following news of unfavorable weather conditions, especially flooding in the spring. These have led to the late planting of the corn crop. Among grains, soybeans were up 2.64% for the week, and closed Friday in the green at $8.92 per bushel; corn for September delivery rose 1.89% in the week and settled at $4.18 per bushel in Friday’s session; and wheat jumped 1.83% and settled at $5.00 per bushel at the end of Friday’s session. Other commodities were lower: coffee was around $0.97 per pound at Friday’s close, down 0.97 for the week; cocoa was down 2.55% for the week and closed Friday’s session at $2,242 per tonne; and sugar had a weekly decline of 1.08% and settled at a price of $0.12 per pound on Friday.
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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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USO002028 Ex. 9/30/2019