Written by Sumit Roy  |

August 13, 2012

Morning Call: Brent Surges Above $115, NatGas Hits 2-Month Low On Weather Forecasts, Gold Edges Higher

Details

Commodities trade mixed.

Commodities are kicking off the new week in mixed fashion, as oil outperforms, while natural gas hits the lowest levels in almost two months. There are no major macroeconomic releases scheduled for today.

In Europe, Spanish 10-year bond yields—currently seen as the best gauge of eurozone sovereign debt fears—were last trading down by 9 basis points to 6.82 percent.

The U.S. Dollar Index fell by 0.23 percent to 82.36.

• Gold is getting a slight boost from today's decline in the U.S. dollar. The yellow metal was last trading up by $1.60, or 0.1 percent, to $1621.80, while silver fell by $0.08, or 0.29 percent, to $28.04.
  
  Platinum edged up by $0.13, or 0.01 percent, to $1400.88, while palladium fell by $0.05, or 0.09 percent, to $582.25.
  
  "We are still in this range-bound trading area, with the upper limit being $1630," LGT Capital Management analyst Bayram Dincer said. "Technically speaking, [a break of] $1,633 is really the trigger that is needed to push gold higher."
  Gold climbs as dollar wilts, stimulus hopes simmer
  
  
• The sizzling rally in crude oil prices continues, as Brent hits the highest level since early May. The benchmark was last trading up by $1.37, or 1.21 percent, to $114.32 after surpassing $115 earlier. WTI gained $0.61, or 0.66 percent, to $89.48.
  
  "The likelihood of some sort of intervention to stimulate economies is supporting the market," said Christopher Bellew, an oil broker at Jefferies Bache. "Also the North Sea, Iran and the Middle East are still a factor."
  Oil hits $115, highest since May, on supply concern
  
  
• Natural gas prices fell to the lowest levels in almost two months today, but prices are attempting to hold onto a key technical support area near $2.75/mmbtu. Gas was last trading down by $0.02, or 0.72 percent, to $2.75 after reaching as low as $2.72.
  
  The latest weather forecasts indicate cooler-than-normal temperatures will spread across the United States over the next week or two, which should reduce demand for power generation, and in turn, natural gas.
  Natural gas on road to recovery
  
  
• Corn is back below $8/bushel after briefly hitting a record near $8.44/bushel on Friday. The grain was last trading down by $0.07, or 0.91 percent, to $7.93, while soybeans fell by $0.10, or 0.57 percent, to $17 and wheat fell by $0.14, or 1.58 percent, to $8.71.
  
  "It is a little bit of profit-taking today and we are seeing a bit of a buy the rumor and sell the fact scenario," said Luke Mathews, a commodities strategist at the Commonwealth Bank of Australia.
  "The fundamental picture is very bullish as the U.S. and global corn supplies are critically tight."
  Corn, soy, take breather from drought rally
  
  
• Copper was last trading down by $0.03, or 0.76 percent, to $3.37/lb on Comex, as last weeks' disappointing China data continues to weigh on the industrial metal.
  
  "There seems to be a general tone of weakness across a number of markets due to some weaker economic data, in particular the disappointing Chinese data," said Gayle Berry, an analyst at Barclays Capital.
  
  "There is an underlying expectation that we will see some sort of policy response. Until the market sees this is going to happen or until we get something better on the news front, this kind of weaker tone looks like it's going to stay with the metals in the short term," she added.
  Copper extends fall, investors hope for stimulus
  

What to Watch For:

4:00 p.m. ET: USDA Crop Progress Report