SINGAPORE/TOKYO: Japanese rubber futures touched a fresh seven-year closing high on Tuesday as firmer oil prices prompted fresh buying, while supply concerns in top rubber producer Thailand lent support. The Osaka Exchange (OSE) rubber contract for August delivery closed up 7.9 yen or 2.48% at 327 yen ($2.22) per kg, the highest close since Feb. 1, 2017.

It logged an intraday high of 329.9 yen earlier in the session, and extended its winning streak to a sixth consecutive session.

Meanwhile, the rubber contract on the Shanghai Futures Exchange (SHFE) for May delivery fell 45 yuan to close at 14,135 yuan ($1,970.03) per metric ton.

“Position adjustments by speculators in thin trading appear to be accelerating the market’s gain,” said Toshitaka Tazawa, an analyst at Fujitomi Securities, adding that higher oil prices also lent support. Oil prices rose on Tuesday as geopolitical tensions in the Middle East continued to spur concern.

Natural rubber often takes direction from oil prices as it competes for market share with synthetic rubber, which is made from crude oil. Other factors behind the rally were “concerns over tighter supply due to bad weather in the producing countries such as Thailand,” a Tokyo-based dealer said, adding that dealers were buying into the undervalued OSE as physical prices were rising.

Thailand’s meteorological agency warned of hot weather in upper Thailand from March 13-17.

Global natural rubber production in January and February rose a combined 0.6% year-on-year, but was outstripped by a 8.5% rise in consumption, the Association of Natural Rubber Producing Countries said in its monthly report published last Friday. The front-month rubber contract on Singapore Exchange’s SICOM platform for April delivery last traded at 161.9 US cents per kg, up 0.31%.