Crude Oil Outperformed the Commodity Complex Last Week



Crude oil outperformed the commodity complex

US crude oil (USO) rose 3.4% for the week ending May 13, 2016. Crude oil rose following the announcement of a surprise fall in crude oil inventory levels on May 11. The PowerShares DB Commodity Tracking ETF (DBC) rose 2.5%. Most of the gain could be attributed to the rise in crude oil. Crude oil (UCO) and its derivatives account for 15.8% of DBC.

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Copper and iron

Industrial metals such as copper (JJC) and iron ore (SLX) fell 3.5% and 6.4% on a weekly basis for the week ending May 13, 2016. China’s (FXI) exports for April 2016 fell 1.8% on a YoY (year-over-year) basis compared to flat expectations. China’s imports for April also fell 10.9% on a YoY basis—compared to Market expectations of a 4% decline. Chinese trade data led to the fall in copper and iron ore prices throughout last week.

Copper and iron ore’s recovery started just a month before crude oil started to recover after February 11, 2016. As a leading indicator of Market sentiments, the fall in industrial metals could impact crude oil–related sentiments.

Gold was flat last week

Last week, gold futures (GLD) fell 1.6%. It’s the second consecutive weekly loss for gold. On a YTD (year-to-date) basis, gold futures gained 18.3%. Last year between January 1, 2015, and May 13, 2015, gold futures gained 2.6%. Gold futures have had a solid start this year—compared to last year—due to the overall bearishness in markets.

Oil-weighted stocks

Bonanza Creek Energy (BCEI), Clayton Williams Energy (CWEI), and Energy XXI (EXXI) are oil-weighted stocks. They have at least a 60% production mix of crude oil. These stocks could be impacted by weakness in industrial metals and the rise of bearish sentiments in the broader markets. Crude oil sentiments also impact ETNs and ETFs such as the United States Brent Oil (BNO), the DWA Energy Momentum (PXI), and the ProShares UltraShort Bloomberg Crude Oil ETF (SCO).

Next, we’ll look at some key macroeconomic indicators for crude oil.


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