eia today in energy 2013-08-13
TRANSCRIPT
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In the News:Energy commodity returns have outpaced
nonenergy returns in past month
Recent increases in crude oil and petroleum product
prices have not been shared by other commodities,
as reported in EIA’s Market Price Uncertainty Report.
Since July 1, the energy component o the Goldman
Sachs Commodity Index (GSCI) rose about 8.1% while
the nonenergy component o the GSCI decreased
slightly (1.5%). This divergence suggests that the recent
increases in crude oil and petroleum product prices are
most likely not because o changes in expectations or
uture global economic growth, which would tend to
increase all commodity prices. Instead, these increases
can likely be attributed to actors specifc to petroleum
markets, including recent geopolitical developments
such as reduced production in Libya.
Source: U.S. Energy Inormation Administration and Bloomberg LP.
Note: Return values or the energy and nonenergy components o the GSCI are indexed to a starting point o March 1, 2013.
What is the S&P GSCI?
The Standard & Poor’s Goldman Sachs Commodity
Index represents the price o a broad spectrum o
commodities and is used as a benchmark or changes
in commodity markets over time. Classes o commodity
products represented within the index include energy,
industrial metals, precious metals, agriculture, and
livestock. Energy accounts or almost 70% o the index,
with crude oil alone comprising about 47%. Price levels
or the GSCI were frst published in 1991, and a related
utures contract is currently traded on the Chicago
Mercantile Exchange (CME). The relative weights
o individual commodities are derived rom global
production levels o these commodities, averaged over
the preceding fve years, as well as the trading volumes
o their utures contracts.
Today in EnergyAugust 13, 2013
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The New York Mercantile Exchange (Nymex) utures price or the West Texas Intermediate (WTI) crude oil contract
accounts or more than one-third o the weighting in the energy component o the GSCI and about 25% o the
entire GSCI (both energy and non-energy components). As a result, the rise o WTI over the last month has
contributed to the substantial upward movement in the energy index.
The upward movement in WTI prices has been accompanied by higher trading volumes or crude oil utures
contracts on Nymex versus IntercontinentalExchange Brent crude oil utures contracts. Recent developments in
the U.S. Midcontinent crude oil market induced more trading in the WTI benchmark compared to Brent. The total
monthly trading volume or WTI surpassed Brent trading volumes during May, June, and July. During this period,
WTI averaged about 1.5 million more total contracts traded than Brent contracts.
In contrast to energy, other commodities have declined in price this year. Copper, gold, and corn, which together
make up about 11% o the S&P GSCI, are down 11%, 22%, and 33%, respectively, since the beginning o the year.
The declines can be attributed to actors such as slower-than-expected growth in emerging market countries as
well as market-specifc explanations such as improved weather that led to higher corn crop yields.
This information was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information
nor any opinion expressed therein constitutes a solicitation of the purchase or sale of any futures or options contracts.