All energy prices, except for natural gas, were significantly lower last week. WTI and Brent crude oil prices (July futures prices) dropped 27.8% and 21.4%, respectively. Gasoil and heating oil prices (July futures prices) fell 19.0% and 21.4%, respectively. Gasoline prices lost 9.9% and natural gas prices rose 2.6%.
Grain prices decreased again last week. Chicago and Kansas wheat prices fell 0.6% and 0.4%, respectively. Corn and soybean prices decreased 1.9% and 0.3%, respectively.
Base metal prices were mixed last week. Aluminum and nickel prices rose 0.4% and 1.6%, respectively. Copper and zinc prices fell 0.9% and 3.9%, respectively.
Gold prices rose 1.4%, silver prices were unchanged and platinum prices fell 2.2%
The Bloomberg Commodity Index decreased 2.98% last week. The energy sector was primarily responsible for the decline. The precious metals and livestock sectors were the only sectors with positive performance last week.
Total assets in commodity ETPs rose significantly once again last week, increasing $4,133.7m. And once again almost all the increase came from gold ($1,924.3m) and crude oil ($2,154.8). There were no significant outflows.
Plunging oil prices early last week moved U.S stock markets significantly lower, strengthened the US dollar and moved 10-year U.S. Treasury rates lower. Down nearly 5% through Tuesday, the S&P 500 Index moved higher the remainder of the week as oil prices rebounded off their lows (see oil comments). A slew of more-negative-than-expected economic data – including the PMI Composite Flash Index, durable goods orders and jobless claims – seemingly did little to move U.S. stock markets last week. At week’s end the S&P 500 Index fell 1.3% to close at 2,836.74, the 10-year U.S. Treasury rate fell 4bps to 0.61% and the U.S. dollar (as measured by the DXY Index) strengthened 0.5%.
Building on increased fears of coronavirus demand destruction and too-little-too-late production cutbacks combined with depleted storage space, WTI crude oil prices (July futures prices) plunged almost 37% through Tuesday last week. Wednesday’s EIA report showing a larger-than-expected increase in oil inventories was partially offset by a smaller-than-expected build in gasoline inventories leaving oil prices somewhat unaffected by the report. President Trump’s tweet on Wednesday instructing the U.S. Navy to destroy Iranian gunboats if they harassed U.S. ships, however, did affect oil prices, pushing WTI crude oil prices almost 11% higher on Wednesday and 3.5% higher on Thursday. Baker-Hughes Rig Count report showed active oil rigs fell by 60 last week to 378, the lowest level since July 2016.
Base metal prices moved with oil prices early last week, moving sharply lower through Tuesday and then mostly recovering losses the remainder of the week. Copper prices, for example, down almost 4% through Tuesday, ended the week down less than 1%. Zinc prices, down almost 4% last week, were pressured lower by swelling LME inventories.
Gold prices moved higher through Thursday, supported by continued coronavirus-related economic weakness and extremely accommodative measures by U.S. and other central banks. A stronger-than-expected consumer sentiment number may have helped move gold prices lower on Friday.
Corn prices continued to suffer from low oil demand and, as a result, low ethanol demand. Wheat prices, up through Thursday, fell Friday on reports China did not intend to purchase U.S wheat. Better planting weather also affected wheat prices.
Coming up this week
- Busy data week accentuated by the FOMC meeting beginning Tuesday, Q1 GDP first estimate on Wednesday and PMI and ISM manufacturing indexes on Friday.
- Start of FOMC meeting, international trade in goods and consumer confidence on Tuesday.
- First estimate Q1 GDP and FOMC announcement on Wednesday.
- Jobless claims, personal income and outlays, and Chicago PMI on Thursday.
- PMI and ISM manufacturing indexes on Friday.
- EIA petroleum report on Wednesday and Baker-Hughes rig count on Friday.