Except for natural gas prices, energy prices were all lower last week, with WTI prices falling substantially. WTI crude oil prices dropped 19.7% while Brent crude oil prices lost 3.7%. Gasoline and heating oil prices fell 2.1% and 9.2%, respectively, and gasoil prices decreased 0.5%. Natural gas prices increased 6.9%.
Grain prices were all higher last week. Chicago and Kansas wheat prices rose 1.3% and 4.2%, respectively. Corn and soybean prices increased 0.3% and 1.1%, respectively.
Base metal prices, with the exception of aluminum prices, moved higher last week. Copper and nickel prices increased 3.1% and 3.8%, respectively and zinc prices rose 0.8%. Aluminum prices fell 0.6%.
Precious metal prices were all higher last week. Gold prices increased 4.2%, silver prices gained 10.8% and platinum prices rose 2.9%.
The Bloomberg Commodity Index increased 2.06% last week. The precious metals sector was responsible for over half of that increase with energy the sole sector detracting from the index’s performance.
Total assets in commodity ETPs rose significantly again last week, increasing $2,153.7m, with almost all ETP sectors increasing. Gold ETP assets increased the most, adding $1,792.9m, followed by crude oil ETPs ($369.2m), broad commodity ETPs ($305.1m), silver ETPs ($107.1m) and energy (ex-crude oil) ETPs ($94.8m).
U.S. stock markets surged (despite 6.6 million initial jobless claims) , longer-term U.S. Treasury rates rose and the U.S. dollar weakened last week on the back of the U.S. Federal Reserve Banks’ $2.3 trillion program to finance bank loans made through the emergency small-business lending program and on hopes the toll of the coronavirus would be lower than anticipated. At week’s end the S&P 500 Index surged 12.1% to close at 2,789.82, the 10-year U.S. Treasury rate increased 13bps to 0.73% and the U.S. dollar (as measured by the DXY Index) weakened 1.1%.
A volatile week for WTI crude oil prices with the spread between the July and May futures contracts increasing from approximately $5/barrel to just under $10/barrel. Down 8% Monday and 9% on Tuesday on increased uncertainty over OPEC+ oil production cutbacks and their efficacy if implemented, WTI crude oil prices rallied 6% on Wednesday following the EIA’s report showing a 600,000 barrel/day reduction in production. Despite reports of OPEC+ agreeing to production cutbacks of 10 million barrels/day on Thursday (during their virtual meeting), WTI crude oil prices closed over 9% lower on the day (and over 22% lower from their highs of the day) with increased concerns that these cutbacks would not be sufficient to offset coronavirus demand destruction.
Increasing on hopes the spread of the coronavirus may be slowing, most base metal prices finished the week higher but off their highs set earlier in the week. Copper prices had their biggest one week gain in over a year while aluminum prices suffered from oversupply concerns.
Gold prices, only slightly higher through Wednesday, surged 6.5% on Thursday after the U.S Federal Reserve bank announced a $2.3 trillion financing package for bank loans guaranteed by the Small Business Association and increased its corporate lending program. Silver and platinum prices followed gold prices as well as stronger base metal prices.
Strong export demand helped move corn prices somewhat higher despite demand destruction as a result of lower oil prices. Wheat and soybean prices continue to be supported by coronavirus demand despite USDA forecasts of higher production and lower exports.
Coming up this week
- Another light data week with data mainly pertaining to economic activity.
- Import and export prices on Tuesday.
- Retail sales and industrial production on Wednesday.
- Housing starts, jobless claims and Philadelphia Fed business outlook survery on Thursday.
- EIA petroleum report on Wednesday and Baker-Hughes rig count on Friday.