(MT Newswires) – Most commodities were in the red amid tame inflation data released Friday as well as mixed developments in the ongoing trade war between the US and China. On Wednesday, US Treasury Secretary Steven Mnuchin reportedly sent an invitation for talks to senior Chinese officials, proposing a meeting in the next few weeks. However, a tweet from President Donald Trump on Thursday denied claims made in the Wall Street Journal that the US is under pressure to make a deal with Beijing. Trump added that the US “will soon be taking in billions in tariffs.” By Friday, Trump had told aides to go ahead with the latest round of trade restrictions — $200 billion in tariffs against Chinese imports — dimming the possibility for productive trade talks to proceed.
Gold ended the Friday session lower, and settling at $1,201.10; likewise, it ended the week 0.23% lower, reversing gains from earlier in the week. Gold had reached one-month highs as the US dollar turned weak after data released by the Labor Department showed a modest increase in US consumer prices in the month of August. The lower-than-expected increase in inflation may prompt the Federal Reserve to stop with just one more rate hike this year, meaning there may not be a rate hike in December. However, the dollar subsequently recovered some lost ground and the yellow metal pared its gains. On the other hand, copper ended Friday’s session lower at $2.65, and was down 0.08% for the week, as the uncertainty surrounding the trade talks between Washington and Beijing continued to spark fears that metals demand from China would decline more than expected. Despite an increase in Chinese industrial output, traders are concerned that the trade dispute would affect China’s growth. These fears have helped push copper prices lower — down about 20% from June highs. China is the largest metals consumer, and copper is extensively used in power and construction industries.
The SummerHaven Dynamic Commodity Index Total Return Index (SDCITR) edged 0.10% higher this week, from a decline of 1.14% in the previous week.
Agriculture commodities ended the week mostly lower, led by grains. Sugar had a weekly increase of 0.18% and settled at a price of $0.11 on Friday; coffee was around $1 per pound at Friday’s close, ending the week down 2.44%; and cocoa fell 1.73% lower for the week and closed Friday’s session at $2,219. Among grains, corn was down 4.35% in the week and settled at $3.52 per bushel in Friday’s session; and soybeans fell 1.72% for the week, closing at $8.31 per bushel on Friday. Meanwhile, wheat declined 0.24% and settled at $5.12 per bushel at the end of Friday’s session. This is the second weekly drop for wheat after the US Department of Agriculture raised its monthly supply and demand report forecast for the Russian wheat harvest to 71 million tonnes, from the prior forecast of 68 million tonnes. The increase in the USDA’s expectations came as no surprise for traders, as a drought in Europe has sparked fears of export curbs.
The SummerHaven Dynamic Agriculture Index Total Return Index (SDAITR) fell 1.20% for the week, compared with a decline of 0.51% in the prior week.
Bucking the downward momentum of most commodities, crude ended Friday’s session higher, following the Energy Information Administration’s report of a notable drop in crude inventories in the US. It reported that crude oil inventories dropped by 5.296 million barrels in the week ended Sept. 7, much more than what analysts had expected. This compares with the American Petroleum Institute’s report last Tuesday that showed crude inventories decreased by 8.636 million barrels last week. Meanwhile, it is feared that hurricane Florence, which is striking South and North Carolina and causing flooding and power interruptions, may result in the shutting down of Colonial Pipeline. As people stocked up gasoline ahead of the storm, demand for crude shot up. To make up for the shortfall in supply due to sanctions against Iranian oil, US President Donald Trump has been encouraging Russia and Saudi Arabia to increase crude output. On the other hand, the International Energy Agency reported that global oil supply reached a record high of 100 million barrels per day in August. Output from OPEC countries and Russia rose to a nine-month high. However, the agency noted that production may drop going forward due to falling output from Iran and Venezuela. The last bit of data come from Baker Hughes (BHGE), which reported Friday that active US rig count was at 867 in the week, up from 860 a week earlier and compared with 749 in the same period of 2017.
Over the last five days, light, sweet crude oil for October delivery rose 1.61% higher, settling Friday at $68.99 per barrel. In other energy futures, gasoline rose during the week, up 0.30% and settled at $1.96 per gallon at the close of Friday’s session. Meanwhile, natural gas fell 1.36% this week and was down in Friday at $2.75 per 1 million British thermal unit.
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