Written by Sumit Roy  |

October 12, 2012

Morning Call: NatGas Hits Another 10-Month High; Gold Edges Down, Oil Trades Mixed As WTI-Brent Spread Narrows

Details

Natural gas and WTI rise, while other commodities fall.

Commodities are slightly lower today after rising strongly on Thursday. However, better-than-expected third-quarter earnings reports from two of the biggest U.S. banks, JPMorgan and Wells Fargo, are giving a boost to the stock market.

In today's macroeconomic news, the producer price index in the U.S. grew by 2.1 percent year-over-year in September, up slightly from August's 2 percent rate. Core producer prices—excluding food and energy—rose by 2.3 percent from a year ago, down from August's 2.5 percent rate.

The U.S. Dollar Index was last trading down by 0.26 percent to 79.57.

• We are seeing modest losses in gold and silver. The yellow metal was last trading down by $1.53, or 0.09 percent, to $1768.07, while the gray metal shed $0.26, or 0.76 percent, to $33.87.
  
  Platinum lost $10.38, or 0.62 percent, to $1673.87 and palladium fell by $2.50, or 0.38 percent, to $648.50.
  
  "Although the Chinese do love gold, they are not overly keen on paying up for it," said David Govett, head of Precious Metals at Marex Spectron. "China and India, as the world's largest gold consumers, are a big reason why gold has stayed high over the last year. But push the price too high and we then have to rely on speculative interest to sustain it, which is never a great way to keep a rally going."
  Gold on course for biggest weekly loss in two months
  
  
• Crude oil prices are mixed, as Brent falls by $1.12, or 0.97 percent, to $114.59, while WTI rises by $0.03, or 0.03 percent, to $92.10. In turn, the spread between the two benchmarks is down to $22.49—still elevated, but down from this week's one-year high of $23.68.
  
  "The potential for a blow-up in the Middle East is being reflected in that persistently wide spread between Brent and WTI," said Michael McCarthy, chief market strategist at CMC Markets.
  Oil Heads for First Weekly Gain in Month on Syria Tension
  
  
• Natural gas is rising for a fifth-straight session, as a dwindling inventory surplus and anticipation of the winter heating season spur buying. Prices were last trading up by $0.03, or 0.69 percent, to $3.63/mmbtu—a fresh 10-month high.
  Natural Gas Hits 10-Month High, Prices To Continue Higher Toward $4 In Anticipation Of Winter Demand
  
  
• The grain complex is lower today amid profit-taking after surging on Thursday on the back of bullish corn supply forecasts from the United States Department of Agriculture. The department lowered its forecast for corn production this season from 10.727 billion bushels to 10.706 billion—the lowest in six years.
  
  Corn was last trading down by $0.05, or 0.58 percent, to $7.69/bushel, while soybeans lost $0.13, or 0.84 percent, to $15.36 and wheat fell by $0.07, or 0.82 percent, to $8.79.
  Corn, wheat set for biggest weekly gain in nearly 3 months
  
  
• Copper was last trading down by $0.03, or 0.84 percent, to $3.72/lb on Comex. Prices remain range-bound between $3.69 and $3.85.
  
  "There's quite a debate out there right now about the extent of the economic slowdown in China and what real impact this is having on metals demand," said Stephen Briggs, metals strategist at BNP Paribas.
  Copper slips ahead of China data, eyes weekly loss
  
  
  

What to Watch For:

1:00 p.m. ET: Baker Hughes Rig Count