Petroleum leads S&P GSCI gains in Q1

London, 10 April 2012

The S&P GSCI gained 5.88% in the first quarter but ended on a weak note with a decline of 2.35% in March. Every major sector posted declines on the back of less-robust economic data from China and greater-than-expected supplies in some commodities.

For Q1, petroleum price strength led index gains as increasing political tension (notably with Iran) and a backdrop of improving global economic optimism, higher equity prices and a weakening U.S. dollar supported commodity prices. However, petroleum strength, coinciding with futures curve movement toward backwardation in Q1 resulted in lesser monthly gains for some of the modified roll indices, as represented by the S&P GSCI 3-Month Forward index gain of 5.79% in Q1 compared to the 5.88% increase in the base S&P GSCI.

The S&P World Commodity Index (S&P WCI), which consists solely of listed commodity futures contracts that trade outside of the U.S., is now up 12.59% year-to-date.

The S&P GSCI gained 5.88% in the first quarter but ended on a weak note with a decline of 2.35% in March. Every major sector posted declines on the back of less-robust economic data from China and greater-than-expected supplies in some commodities. For Q1, petroleum price strength led index gains as increasing political tension, notably with Iran, and a backdrop of improving global economic optimism, higher equity prices and a weakening U.S. dollar supported commodity prices.

Unleaded gas was the best-performing S&P GSCI commodity in Q1, which supported the S&P GSCI Petroleum index’s 8.75% increase. Mild winter weather pressured natural gas to be the worst performing commodity in Q1 which tempered overall energy sector gains as measured by the 7.32% Q1 increase in the S&P GSCI Energy index. Anticipation of the release of strategic petroleum reserves contributed to the S&P GSCI Energy index’s 2.11% decline in March.

Increasing supply concerns pressured livestock prices, making it the worst-performing sector as measured by the 8.03% March decline in the S&P GSCI Livestock index, which resulted in a Q1 decline of 4.87%. Ample global supplies and concern about China’s growth also weighed on the industrial metals in March. The S&P GSCI Industrial Metals index represented the second worst-performing sector on the month as measured by the MTD decline of 4.56% in the S&P GSCI Industrial Metals index, which lessened the Q1 increase to 6.31%.

Agriculture prices were tame in Q1 as measured by the S&P GSCI Agriculture index gain of 1.9% on the back of a 0.4% decline in March.

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