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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.