Commodities and Precious Metals Update (Week Ending Apr. 5)
Posted:Key points
- The energy sector was the best performing sector last week, with all components ending higher. WTI and Brent crude oil prices increased 4.9% and 4.1%, respectively. Gasoil and heating oil prices rose 2.0% and 3.6%, respectively. Gasoline prices rose 4.6% while natural gas prices were practically unchanged at up 0.1%
- The grain sector also performed well with all components higher. Corn prices increased 1.7%. Chicago wheat prices increased 2.2% and Kansas wheat prices gained 0.3%. Soybean prices increased 1.7%.
- A mixed week for base metal prices. Aluminum and copper prices were down, declining 1.5% and 1.4%, respectively, while nickel prices increased 0.6%. Zinc prices were unchanged.
- Gold and silver prices ended the week lower, declining 0.5% and 0.2%, respectively. Platinum prices move higher again last week, climbing 6.2%.
- Lean hog prices reversed course from last week jumping 11.8%.
- The S&P GSCI outperformed the Bloomberg Commodity Index last week with the S&P GSCI up 3.03% and the Bloomberg Commodity Index up 1.63%. The S&P GSCI’s larger exposure to energy was primarily responsible for its outperformance.
- Total assets in commodity ETPs fell $1,155.1m last week. Gold (-$936.1m), crude oil (-$95.9m) and broad commodity (-$95.2m) were primarily responsible for the ETP outflows.
Commentary
Positive economic reports from both the U.S. and China combined with increased optimism over a U.S.-China trade agreement pushed U.S stock and commodity markets higher last week. A slew of solid U.S economic reports – including ISM manufacturing index, durable goods orders and jobless claims – throughout the week, culminating with a better-than-expected employment situation report on Friday along with better-than-expected Chinese manufacturing data on Monday helped push the S&P 500 Index up 2.1% and the Bloomberg Commodity index up 1.6%. The 10-year U.S. Treasury rate increased 10bps to 2.50% and the U.S. dollar as measured by the DXY index strengthened 0.1%.
Despite a much-larger-than-expected increase in U.S. oil inventories and a rise in active U.S rigs last week, WTI crude prices moved higher again last week. Strong economic reports in both the U.S. and China, increased optimism over a U.S.-China trade agreement, one-time extenuating factors increasing U.S. inventory levels and lower Saudi Arabia production helped push WTI oil price higher by almost 5% for the week and just under 39% for the year.
Most base metal prices moved higher through Wednesday last week on renewed optimism over a U.S.-China trade agreement and a strong Chinese manufacturing report on Monday. Zinc and Nickel prices were also supported over concerns of supply shortages. Base metal prices moved lower Thursday and Friday with expectations of a final U.S.-China trade agreement still weeks away. Copper prices also suffered as inventory levels tracked by LME increased on Friday for the fifth week in a row.
Gold and silver prices moved lower as the 10-year U.S. interest rate moved higher and the dollar slightly strengthened. Platinum prices enjoyed their biggest increase in over 2 years, pushing off their lows relative to palladium and gold prices. Platinum prices are up 13.7% year-to-date.
Corn, wheat and soybean prices all increased last week supported by strong U.S and Chinese economic reports and increased hopes of a U.S.-China trade agreement. Increased U.S wheat exports combined with shrinking wheat plantings also supported wheat prices.
Lean hog prices soared 11.8% with swine fever reported in another Chinese province increasing fears of the spread of the disease.
Coming up this week
- Moderate data week accentuated by inflation numbers, the release of FOMC minutes and Fed. Chairman Jerome Powell speaking Wednesday through Friday.
- Factory orders on Monday.
- CPI and release of FOMC minutes on Wednesday.
- PPI and Jobless claims on Thursday.
- Consumer sentiment on Friday.
- EIA Petroleum Report on Wednesday and Baker-Hughes Rig Count on Friday.
