Written by Sumit Roy  |

July 18, 2012

Market Wrap: NatGas Surges 6% Ahead Of Inventory Report, Oil Rally Continues, Grains Near Record Highs

Details

Commodities mostly rose, but gold fell today.

Volatility in commodity markets picked up a bit today-- at least relative to Monday and Tuesday. But there remains a distinct lack of catalysts, as traders await more evidence on the health of the global economy and the prospect of stimulus from central banks.

In today's macro data, housing starts jumped in June by 6.9 percent to 760K, but building permits fell by 3.7 percent in the month to 755K.

The U.S. Dollar Index traded unchanged at 83.06.

• Lackluster trading action continued in precious metals. Gold was last trading down by $6.70, or 0.42 percent, to $1575.70, while silver shed $0.12, or 0.44 percent, to $27.19.
  
  Platinum fell by $11, or 0.78 percent, to $1408 and palladium lost $7, or 1.21 percent, to $578.
  
  "No doubt, the gold bulls will seize on the fact that further stimulus is not off the table, but it is not going to happen for a while, if it ever does, and as such, the upside for gold remains limited to my mind. We are still in the same ranges," Marex Spectron said. "I see no reason for the time being for that to change. The market remains thin, with low volumes and no real interest."
  
  
• Crude oil prices rallied to fresh highs today, with both Brent and WTI at the best levels since late-May. Geopolitical tensions in the Middle East are rising, as fighting in Syria spills into the capital, Damascus, sharply intensifying the ongoing civil war.
  
  While the country is not a major oil exporter, conflict in the region is always a cause for concern.
  
  Brent was last trading up by $1.10, or 1.06 percent, to $105.10, while WTI gained $0.68, or 0.76 percent, to $89.90.
  
  
• Natural gas prices surged today amid the ongoing heat wave in the United States. The latest weather forecasts show no respite in the warmer-than-normal temperatures that are enveloping much of the country.
  
  Gas was last trading up by $0.18, or 6.33 percent, to $2.97 after reaching as high as $3.02.
  
  Thursday's inventory report from the EIA may show that storage levels increased by 34 billion cubic feet last week, according to a consensus of analysts surveyed by Reuters.
  
  
• Grains rallied across the board today and corn and soybeans are now hovering just below record highs. Corn was last trading up by $0.11, or 1.4 percent, to $7.90, while soybeans added $0.35, or 2.1 percent, to $16.74 and wheat rose by $0.07, or 0.79 percent, to $8.92.
  
  "We will likely lower our yields again next week and the following week based on the current weather forecast, which would suggest the August corn and soybean yield will reflect the largest percent deviation from trend since the 1988 crop year," said Terry Reilly, analyst for Citigroup.
  
  
• Copper was last trading at $3.47/lb on Comex, up $0.01, or 0.41 percent, on the session.
  
  "Equity markets turning solid is probably the best thing that is working for the copper market," said Sterling Smith, vice-president of commodity research at Citibank's Institutional Client Group told Reuters.