US copper futures took their cue from a rallying oil market to close higher in thin volume on Wednesday, after brief volatility caused by concerns over the economy.
"This darn market is just keeping an eye on whatever the flavour of the month is and crude oil seems to have taken a rather substantial lead in pulling copper around these days," said a trader in New York. Most active copper for May delivery on the New York Mercantile Exchange's Comex division ended up 0.50 cents, or 0.16 percent, at $3.0625 a lb, below the session high of $3.0785.
It slid as much as 0.44 cents after the open, to a session low of $3.0135, as US Federal Reserve chairman Ben Bernanke prepared to address Congress on the economy. Data showing a drop in latest weekly US mortgage applications had also kept lid on prices as they indicated a weak market for new houses, one of the lifelines of the copper industry.
Banana's testimony that near-term prospects for the US housing market were uncertain and that developments in the supreme mortgage sector have raised questions kept Comex copper in the negative for less than two hours of trade. The push from oil then sent it higher. "Copper certainly has its own fundamentals and Technicals, but if you take a look at a five-minute chart of crude and copper now, they look almost identical in terms of the breakouts," the New York trader said.
US crude was up $1.20, or 1.8 percent, at $64.13 a barrel, off a session high of almost $65, as the market remained on the edge over simmering tensions between Iran and the West.
Overnight, oil spiked $5 to six-month highs on a rumour, quickly dismissed by the United States, that a US naval vessel had clashed with Iranian forces. Britain denied another market rumour that it had sent troops to release 15 British military personnel being held in Iran.
Analysts said copper, which hit three-month highs earlier this week, was supported in the near-term by expectations of strong demand from China and forecasts of a further drop in London Metal Exchange (LME) inventories. Final turnover estimated for Comex copper on Wednesday was 4,250 lots, less than a third of Tuesday's 14,053 lots. Open interest fell 533 lots to 74,716 lots. LME copper for three-month delivery closed at $6,655, down $25 from Tuesday, after bouncing back from a session low of $6,602.