Just when you thought things were beginning to quiet down in the metals market on the final trading day before Christmas, mysterious copper trades emerged in Shanghai, sending ripples through London and New York.
In the 15 minutes ended 9:15pm on Friday in Shanghai, 22,426 copper contracts were traded, triggering spikes in volume that helped reverse the red metal’s losses on the London Metal Exchange and Comex in New York.
That Comex sent prices up for a 13th straight session, extending the longest rally in more than a year.
Copper futures for March delivery rose 0.6 percent to settle at US$3.2385 per pound at 12:13pm on the Comex, after touching US$3.243, the highest since Oct. 17. Volume was just 15 percent less than the 100-day average for that time of day, compared with 40 percent for gold, 51 percent for crude oil and 59 percent for corn.
“Strong buying in Shanghai on the night session drove copper,” BMO Capital Markets New York-based head of base and precious metals trading Tai Wong said in an e-mail.
Traders are reluctant to sell ahead of the Christmas holiday, “especially since the market isn’t really sure why it rallied,” he said.
Copper, often seen as a barometer of the global economy, has risen 29 percent this year, heading for its biggest annual gain since 2010 and among the best-performing commodities.
The metal got an additional boost last week from central banks, as the US Federal Reserve and the European Central Bank increased their forecasts for growth in their economies next year.
Meanwhile, oil futures were little changed on Friday as traders concerned about next year’s production growth shrugged off reports of a static rig count and falling US stockpiles.
Front-month futures on Friday rose 0.2 percent in New York, with a weekly gain of 2 percent. Prices jumped the previous two days after US data on Wednesday showed crude stockpiles tumbling.
On Friday, the rig count remained at 747, but traders seemed unconvinced that US production would not continue to rise next year, undermining OPEC’s deal to bring the market into balance.
Traders have been swayed by a combination of that uncertainty and some year-end profit-taking, with prices up about 8 percent for the year, Again Capital LLC founding partner John Kilduff said in New York.
“It’s not a great bullish setup for January,” Kilduff said in a telephone interview.
Growing US production has been “aggravating” for OPEC and its allies, and the year has seen “a pretty good run, so now we’re also seeing some profit-taking,” he said.
ICE Futures Europe exchange data released on Friday showed that hedge funds have cut net bullish bets on Brent crude from record levels.
Worldwide inventories will not fall enough to be near the level targeted by OPEC when the group meets in June, Saudi Arabian Minister of Energy, Industry and Mineral Resources Khalid Al-Falih said this week, signaling that the kingdom might keep production restrained to the end of the year.
West Texas Intermediate for February delivery settled at US$58.47 per barrel on the New York Mercantile Exchange, up US$0.11.
Brent for February settlement rose US$0.35 to close at US$65.25 per barrel on the London-based ICE Futures Europe. The global benchmark traded at a premium of US$6.78 to West Texas Intermediate.
The North Sea’s Forties Pipeline System, which carries crude used to price the benchmark Dated Brent, is set to return to normal flows early next year, operator Ineos Group said in a statement.
It added that it expects to complete repairs to a hairline crack on the link by “around Christmas.”
Wholesale gasoline picked up US$0.01 to US$1.76 per gallon, while heating oil rose US$0.02 to US$1.97 per gallon and natural gas jumped US$0.07 to US$2.67 per 1,000 cubic feet.
Gold rose US$8.20 to US$1,278.80 per ounce and silver climbed US$0.21 to US$16.44 per ounce.
Additional reporting by AP
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