Copper futures could be set to rise in the coming weeks, as existing stockpiles of the metal fell for the 31st week in a row, Bloomberg News reported Thursday. Inventories monitored by the London Metal Exchange fell close to the lowest level since last November.
In addition, the contango – the discount of spot copper to futures contracts – shrank today, indicating an increase in immediate demand.
"Continued stock drawdowns mean the market is looking very tight," Gayle Berry, an analyst with Barclays Capital, told the news service. "The fact that we’re beginning to see nearby spreads tighten is reflecting that there is increased demand for spot material."
Copper futures for December delivery rose 0.2 percent to $3.575 per pound on the Comex in New York; meanwhile, cash copper went for $3.4952 on the London Metal Exchange.
Copper's price movements may be determined by the health of the U.S. construction industry, which has been faltering since a new homebuyer's credit expired this spring. The credit failed to boost total demand much, instead simply compressing purchases into the first half of 2010.
But after the initial drop-off and some big corrections during the summer, it looks like the market may be recovering. Existing home sales rose 7.6 percent to a seasonally adjusted annual rate of 4.13 million in August, up from a rate of just 3.84 million in July, according to the National Association of Realtors.
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.