Commodities And Precious Metals Update (Week Ending May 15, 2020)

Key points

Energy prices, except for natural gas prices, all moved higher last week. WTI and Brent crude oil prices (September futures) increased 4.0% and 0.7%, respectively. Gasoil and heating oil prices (July futures prices) increased 2.8% and 1.6%, respectively while gasoline prices rose 2.2%. Natural gas prices dropped a hefty 11.8%.

Grain prices were lower last week, with wheat prices falling the most. Chicago and Kansas wheat prices dropped 4.2% and 5.8%, respectively and soybean prices fell 1.4%. Corn prices were unchanged.

Base metal prices all finished lower. Copper and nickel prices decreased 3.1% and 3.9%, respectively, and aluminum and nickel prices fell 1.7% and 2.1%, respectively.

Gold and platinum prices increased 1.8% and 1.3%, respectively while silver prices surged 8.2%

The Bloomberg Commodity Index declined 1.06% last week. The energy and base metals sectors decreased the most last week. The precious metals sector was the only performance positive sector last week.

Total assets in commodity ETPs increased $2.349.0m with almost all the increase again coming from gold ETPs ($2,092.9m). Silver ETP assets increased $221.0m, the only other significant ETP inflow. There were no significant ETP outflows.

Commentary

U.S. Federal Reserve Bank Chairman Powell’s “highly uncertain” economic outlook comments, larger-than-expected declines in both CPI and PPI and emerging concerns regarding reopening “too soon” pushed the S&P 500 Index almost 4% lower through Wednesday. Despite worse-than-expected jobless claims and a record decline in retail sales and industrial production, stronger-than-expected financial sector earnings reports helped moved the S&P 500 Index off its lows on Thursday and Friday. At week’s end, the S&P 500 Index fell 2.3% to 2,853.70, the 10-year U.S. Treasury rate fell 4bps to 0.65% and the U.S. dollar (as measured by the DXY Index) strengthened 0.6%.

Despite Saudi Arabia announcing an additional 1 million barrel/day production cutback and an unexpected decline in U.S. and Cushing inventory levels, WTI crude oil prices (September futures price) fell almost 6% through Wednesday, pushed lower by increased concerns of the timing and strength of global economic recovery.    Thursday’s increase in the IEA’s global demand forecast for 2020 by almost 700,000 barrels/day and its expectations that supply would fall by 5.5 million barrels through the end of the year, helped push WTI crude oil prices higher by over 10% from Wednesday’s low. The Baker-Hughes Rig Count report showed active oil rigs fell for the ninth consecutive last week, decreasing by 34 to 258.

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