Winter Park, Florida 29/09/2016 - Copper caught a minor lift after oil prices rallied following the announcement of crude production cuts; however, the gains were capped by concerns over rising LME warehouse inventories.
Copper for December delivery on the Comex division of the New York Mercantile Exchange ended up 0.25 cents at $2.19 per pound in modest volumes. Trade was in a narrow range of $2.18 to $2.1075.
“Base metal prices have been solid if not volatile ahead of the Chinese holiday next week,” Sucden Financial noted. “The driving forces today have been the OPEC oil production cut announcement and the firmer dollar on the back of the better than expected second quarter growth figures and jobless claims.”
The Organisation of the Petroleum Exporting Countries announced that it will reduce output to a range of 32.5-33.0 million barrels per day, a 700,000 decrease from the current output at 33.24 million bpd. The deal could be formalised in November.
As for US data, initial jobless claims inched up 3,000 to 254,000 but this was better than the 260,000 expected and the 82nd consecutive week below 300,000. US final GDP was better-than-expected at 1.4 percent while final GDP price index came in in line with the forecast at 2.3 percent. But pending home sales disappointed at -2.4 percent.
In the wider-markets, the dollar was slightly stronger at 1.1215 against the euro, while the Dow Jones industrial average and S&P 500 were down 0.71 percent and 0.55 percent respectively.
As for other commodities, light sweet crude (WTI) oil futures were up 61 cents, or 1.3 percent, at $47.66 per barrel, while the most-actively traded Comex gold contract was at $1,325.30 per ounce, up $1.60.
As for copper specific data, BHP was forced to suspend operations at its Olympic Dam copper-gold mine in Australia due to a power outage. It is not yet certain when production can restart.
But a climb in London Metal Exchange copper stocks took the steam out of any perspective rally. Inventories increased a net 10,100 tonnes to 379,175 tonnes - a move centred on New Orleans, where inventories climbed 7,075 tonnes to 46,675 tonnes. Still, Asia stocks also rose - up 2,775 tonnes and 2,025 tonnes respectively in listed warehouses in Busan and Port Klang.
"The third quarter was particularly weak [in the US] - there just aren’t many buyers on the consumer side at the moment. I wouldn't be surprised to see move deliveries [into exchange warehouses]," a US trader recently told FastMarkets.
Three-month copper on the LME ended at $4,842 per tonne, up $24 on Wednesday's close, having earlier peaked at $4,860.