Written by Sumit Roy  |

February 07, 2012

Morning Call: Gold Eases On Greece Worries, Brent Hits Fresh 6-Month High As WTI-Brent Spreads Top $20

Details

Brent and natural gas rise, while other commodities fall.

IN TODAY'S HEADLINES...

• Most commodities are lower today as markets continue to watch the events in Greece, where lawmakers are negotiating with each other and with the EU and IMF over what reforms to implement in order to receive the second €130 billion bailout that is required to stave off default in the country.
  Greek Leaders Face Crunch Talks; Unions Strike
  
  
• Modest selling pressure is hitting precious metals. Gold last traded lower by $5.28, or 0.31 percent, to $1715.07/oz, while silver fell by $0.27, or 0.79 percent, to $33.39. Platinum shed $7.25, or 0.45 percent, to $1619.25 and palladium lost $7.75, or 1.1 percent, to $698.25.
  
  "We now expect platinum mined output to be flat in 2012, and to rise by 2.5 percent in 2013," said BNP Paribas. "Palladium output may contract by 1 percent in 2012 and increase by 2 percent the following year."
  Gold eases toward $1710, all eyes on Greece
  
  
• The stark divergence between the two major crude oil benchmarks continues today as Brent rises and WTI falls. Brent has risen in eight of the past nine sessions, while WTI has only risen in two of them. Brent was last trading up by $0.27, or 0.23 percent, to $116.20/bbl after reaching as high as $116.70 earlier, the best level since Aug. 2. WTI fell by $0.58, or 0.6 percent, to $96.33.
  
  As we wrote in a Market Alert on Monday, Brent has now broken above the key $115 resistance level, and a move to $120 and potentially higher looks likely.
  
  Meanwhile, the spread between WTI and Brent continues to expand. It was last at $19.87 after reaching as high as $20.21, the widest level since Oct. 24.
  Market Alert: Brent Breaks Out Above Key Resistance, WTI-Brent Spread Blows Out Again
  
  
• Natural gas is higher for a second session, as prices trade up by $0.03, or 1.22 percent, to $2.58/mmbtu. The latest weather forecasts indicate warmer-than-normal temperatures across the major consumption areas of the Midwest and the East, keeping with the bearish trends we've seen all winter.
  Natural gas price outlook grows increasingly bleak
  
  
• The grain complex is lower today, with corn last trading down by $0.04, or 0.58 percent, to $6.41/bushel, while soybeans sheds $0.04, or 0.28 percent, to $12.30, and wheat loses $0.07, or 1.08 percent, to $6.61.
  Famers Plan Biggest Crops Since 1984
  
  
• Copper prices are lower by $0.05, or 1.24 percent, to $3.82/lb on Comex. "It's all Greek related right now, there's nothing fundamentally to move the markets in term of Chinese demand," said Ed Meir of INTL-FCStone. "Markets will discount some sort of agreement and the firmer tone will probably carry on until we have the next big shoe drop—the Chinese trade data for January could be significant."
  Copper eases as China buyers out for the count
  
  

What to Watch For:

1:30 p.m. EST: API Statistical Bulletin