Written by Sumit Roy  |

October 22, 2012

Morning Call: Gold, Oil Rebound But Caterpillar Warning Limits Upside; NatGas Holds Near 10-Month High

Details

Commodities are up broadly.

Commodities are mostly higher today. Economic news flow is light, with no major releases scheduled for today, but the corporate earnings season rages on. This morning, Caterpillar—the heavy equipment manufacturer—reported that its profits beat analyst expectations in the third quarter. However, the company cut its full-year guidance and warned that global economic growth in 2013 will remain challenged.

"We are taking a pragmatic view of 2013—we're not expecting rapid growth, and we're not predicting a global recession. At this point, we expect 2013 sales will be similar overall to 2012, but with a slightly weaker first half and a slightly better second half," Caterpillar Chairman and Chief Executive Officer Doug Oberhelman said. "While there's reason for optimism, and we're not expecting a global recession in 2013, we are prepared and stand ready to take action no matter what happens to the global economy."

Taking a look at currency markets, the U.S. Dollar Index was last trading down by 0.11 percent to 79.53.

• Gold and silver are rebounding slightly from six-week lows. The yellow metal was last trading up by $4.15, or 0.24 percent, to $1725.90, while the gray metal added $0.15, or 0.48 percent, to $32.23.
  
  Platinum shed $8.01, or 0.49 percent, to $1611.49 and palladium edged up by $3, or 0.48 percent, to $629.
  
  "The market is licking its wounds after the dramatic sell-off late Friday," Saxo Bank Vice President Ole Hansen said. "It goes to show that the market is in a bit of a correction mode at the moment, looking over the shoulder for the next potential buyer. It was overdue after the continuous build in speculative interest in the last couple of months and some of the [speculative interest] was given back last week."
  
  "The big question is how low can it go," he added. "I think it may have another leg down, I don't think it's out of the woods yet. It's lacking drivers, the calendar [for data] looks thin and it's difficult to see where a driver would come from."
  Gold rebounds as stocks recover, dollar retreats
  
  
• Crude oil is modestly higher, as Brent rises by $0.35, or 0.32 percent, to $110.49, while WTI adds $0.54, or 0.6 percent, to $90.59. In turn, the WTI-Brent spread is down to $19.90.
  
  "The uncertain situation in the Middle East ... remains a factor with the tendency to drive prices upward. Lebanon has now become a new seat of unrest, with violent disputes having taken place there yesterday," analysts at Commerzbank said.
  
  "The biggest risk factor for the oil price is further deterioration of general market sentiment and accompanied growth in risk aversion," they added.
  Supply concerns, weak dollar lift crude-oil prices
  
  
• Natural gas rose by $0.01, or 0.39 percent, to $3.63/mmbtu—close to 10-month highs—after the latest weather forecasts indicated that colder-than-normal temperatures could spread across the country at the end of the month.
  In a Natural Gas Glut, Big Winners and Losers
  
  
• The grain complex is higher. Corn was last trading up by $0.03, or 0.43 percent, to $7.65/bushel, while soybeans added $0.16, or 1.06 percent, to $15.51 and wheat rose by $0.09, or 1.06 percent, to $8.82.
  
  "Ukrainian market is talking about [a wheat] export ban as of November 15," said Erin FitzPatrick, Rabobank analyst.
  U.S. wheat up on tight supplies, Ukrainian export ban looms
  
  
• Copper was last trading down fractionally to $3.64/lb on Comex.
  
  "The rise in [Chinese copper] inventories was due to China's sluggish downstream demand for copper, as well as its recent high copper imports and output levels," said Great Wall Futures Analyst Li Rong.
  Copper hits one-month low after weak Japan export data
  
  
  

What to Watch For:

No notable releases