BLBG: Copper Falls to Two-Week Low as Higher Oil Prices May Curb Economic Growth
Copper fell for a third day in London to the lowest price in almost two weeks on concern that higher oil prices may erode economic growth, reducing demand for industrial metals.
Crude closed at a 29-month high in New York yesterday on concern violence in Libya would crimp Middle Eastern supplies. Oil prices at $140 a barrel would cause some advanced economies to slide back into recession, Nouriel Roubini, the economist who predicted the global financial crisis, said in Dubai today. Crude last traded at $105.18 a barrel.
“The copper market’s under some pressure, obviously because of the events in the Middle East,” said Daniel Brebner, an analyst at Deutsche Bank AG in London. “With oil prices higher, there is an expectation that maybe global growth could be truncated, and if that’s the case, then certainly expectations” for metals demand may weaken, he said.
Copper for three-month delivery dropped $95, or 1 percent, to $9,404 a metric ton at 11:56 a.m. on the London Metal Exchange. Prices reached $9,346.25, the lowest level since Feb. 24. Copper for May delivery on the Comex in New York declined 1.1 percent to $4.2785 a pound. All of the six main metals traded on the LME slid except aluminum.
Government warplanes bombed rebel positions near the Libyan oil hub of Ras Lanuf, adding urgency to discussions among U.S. and allied governments about imposing a no-fly zone. Members of the North Atlantic Treaty Organization are consulting on a “wide range” of potential responses, to the turmoil, including military options, U.S. President Barack Obama said.
Open Interest
Nickel for three-month delivery on the LME dropped 3.5 percent to $26,525 a ton after reaching $26,215, the lowest level in almost six weeks. Open interest, or the number of contracts outstanding, climbed to 148,242 lots as of March 4, Bloomberg data showed. That was the highest level since at least September 2005.
“As of the selloff we saw over the last couple of days, the systematic long positions now have been reduced, I imagine, quite substantially,” said Alex Heath, head of industrial- metals trading at Royal Bank of Canada Europe Ltd. in London. Nickel slid 4.6 percent yesterday, leading declines among the six main LME metals.
Aluminum increased 0.2 percent to $2,562 a ton and lead declined 1.7 percent to $2,535 a ton. Tin slumped 2.1 percent to $30,100 a ton and zinc dropped 0.2 percent to $2,365 a ton.
To contact the reporter on this story: Agnieszka Troszkiewicz in London at atroszkiewic@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net
