Base metal rally reverses, LME down by kerb close

London Metal Exchange (LME) prices slipped by Wednesday's kerb close as fund and option-related buying dried up and investors sold into the rally, analysts and traders said.
"We've seen all this fund buying in the last couple of days much of which has been related to the oil price," one London Metal Exchange trader said.
"As the oil price has risen basket funds have been buying metals along with other commodities and the regular London Metal Exchange guys didn't want to fight that so bought along with them," he said.
NYMEX crude oil futures fell more than $1 on profit taking as traders expected that an Opec meeting on Thursday would increase the cartel's oil production quotas, traders said.
NYMEX crude for July delivery dropped $1.01 or 2.4 percent to $41.32 from Tuesday's record settlement of $42.33.
"Although higher oil prices, all other things being equal, are bad for metals, the conditions in which you tend to get higher oil prices - strong economic growth and high demand - are also periods when you also have high metal prices," Adam Rowley, analyst at Macquarie said.
"The feeling now is these basket commodities buyers have done what they want to do so we'll sell into the rally," he said.
Another trader said:" The options declaration has had a lot to do with this rally as well as fund-buying."
Dealers said he had seen short covering against $2,900 calls on copper and against $1,700 calls on aluminium.
Copper fell to $2,748 a tonne at the end of open-outcry trading from Tuesday's evening kerb close at $2,817.
"The profit taking in the midsession turned into wholesale selling this afternoon," one broker said.
The cash to three month spread eased to $35/45 backwardation from around $60 on Tuesday.
Aluminium fell $37 to $1,673.
Technical analysts had expected aluminium to run out of steam ahead of a band of resistance towards $1,735/38.
Nickel dropped 3.42 percent to $12,000 and tin fell $150 to $9,200/250.
Lead was down 3.23 percent to $809 from $836, having peaked at around $850.
Zinc fell to $1,093 from $1,115.50 previously.