Written by Sumit Roy  |

October 09, 2012

Morning Call: Brent Tops $113 As WTI Spread Reaches 1-Yr High, Gold Steadies After IMF Cuts Growth Forecast

Details

Commodities rise modestly.

Commodities are edging higher ahead of aluminum giant Alcoa's third-quarter earnings announcement after the bell, which will kick off the corporate earnings season. Profit expectations have been dampened by sluggish economic growth, thus better-than-expected results could kick-start a rally in risk assets.

In today's news, the International Monetary Fund cut its forecast for global growth this year and next, to 3.3 percent and 3.6 percent, respectively. Growth of 3.3 percent this year would be the slowest rate since 2009 and down from 4 percent in 2011.

The U.S. Dollar Index was last trading up by 0.14 percent to 79.65.

• The precious metals sector is just slightly higher. Gold was last trading up by $0.77, or 0.04 percent, to $1775.72, while silver rose by $0.01, or 0.04 percent, to $34.
  
  Platinum gained $2.74, or 0.16 percent, to $1697.24 and palladium added $2.90, or 0.44 percent, to $661.40.
  
  "The return of dollar strength has stalled the move in gold, but it's very temporary, we're still on track to see more gains," said Deutsche Bank's Michael Lewis.
  Gold steadies as dollar firms
  
  
• Crude oil is higher today, as Brent rises by $1.58, or 1.41 percent, to $113.40, while WTI gains $1.23, or 1.38 percent, to $90.56.
  
  The spread between the two benchmarks reached as high as $22.85 today—the widest level in a year. A glut of crude in the U.S. Midwest continues to saturate the landlocked region with oil, depressing WTI.
  Oil Rises First Time in 3 Days; Brent Gap Widest in Year
  
  
• Natural gas was last trading down by $0.01, or 0.32 percent, to $3.39/mmbtu.
  
  Weather forecasts have shifted from projections of colder-than-normal temperatures to warmer-than-normal temperatures for the middle and end of October. Obviously, weather is fickle; thus, traders will continue to keep a close eye on the latest temperature forecasts.
  
  "Winter is one of the main events in the natural gas market, it's just not there yet," said Tom Saal, senior vice president of energy trading at INTL Hencorp Futures. "We have a lot of inventory. It's keeping the market actually a little bit below where it was a year ago."
  Natural Gas Futures Drop as Warmer Weather to Cut Heating Demand
  
  
• The grain complex is higher today. Corn was last trading up by $0.02, or 0.3 percent, to $7.44/bushel, while soybeans added $0.17, or 1.06 percent, to $15.68 and wheat rose by $0.09, or 0.99 percent, to $8.70.
  
  "Corn has risen because of the expectation that the [Thursday] USDA report will show a reduction in yields," said Lynette Tan, analyst at Phillip Futures in Singapore. "Soybeans had fallen in the previous sessions, so I think today's rise is a correction to that."
  Corn firms ahead of USDA, soybeans rise on bargain hunting
  
  
• Copper was last trading up by $0.02, or 0.54 percent, to $3.74/lb on Comex.
  
  "Sentiment and prices are still very downbeat and I wouldn't be surprised if prices rally towards the end of the year on better liquidity and improving sentiment," said Eugen Weinberg, head of commodity research at Commerzbank.
  Copper steady; China stimulus hopes offsets global growth fears
  
  

What to Watch For:

No notable releases