Tokyo rubber climbs

Tokyo rubber futures edged higher on Wednesday after slipping to a two-month low the previous day as falls in oil prices and a deteriorating technical trend kept the soft commodity under downward pressure.
Sentiment in the Tokyo Commodity Exchange futures market was dampened by hopes for more physical rubber supplies as rain subsided in Thailand, the world's top producer, and Malaysia, the third biggest, traders said. The benchmark TOCOM rubber contract for May delivery closed the session up 0.5 yen or 0.2 percent at 266.5 yen per kg from Tuesday's settlement.
"Funds have been massively liquidating their longs as sentiment deteriorated. We can see this after seeing a huge fall in open interest," said Shuji Sugata, manager at Mitsubishi Corp Futures and Securities Ltd. Open interest or the number of outstanding contracts, in TOCOM rubber futures was at 33,771 contracts on Tuesday, down almost 30 percent in the last month.
Open interest is often seen as a gauge of the market popularity of a contract. The key contract fell as far as 261.6 yen on Tuesday, the lowest for a benchmark contract since October 3. Technical sentiment deteriorated after the key contract dipped below the 100-day moving average on Tuesday but it finished above the level by the close.
The market will continue to watch the 100-day average as an important technical point, which was at 264.9 yen as of Wednesday. Speculators were keen to sell on rallies due to TOCOM rubber's weak technical trend as the key contract has dropped about 7 percent in the last week since hitting a high of 282.8 yen on November 27.
"We may find support around 260 yen, but a drop below the level could trigger fresh selling," Sugata said. US crude oil futures edged up on Wednesday after falling 1 percent a day earlier on a US intelligence report on Iran, while traders looked ahead to the start of an Opec meeting on output policy later in the day.
Front-month US crude for January delivery was up 7 cents at $88.39 a barrel on the Globex electronic trading platform after settling down 99 cents at $88.32 on Tuesday, retreating further from a record $99.29 hit on November 21.