Base metals remained under pressure on Friday at the end of a fraught week for commodity markets with the threat of tighter monetary policy in China, President Obama’s plans to reform Wall Street and the re-emergence of sovereign risk weighing on sentiment.
Copper slipped 0.3 per cent to $6,845 a tonne after dropping below the key $7,000-a-tonne mark on Thursday following a wave of selling swept across the base metals sector.
Aluminium lost 0.4 per cent at $2,090 a tonne, while zinc slipped 0.4 per cent at $2,142 a tonne.
However, lead and nickel managed to hold on to an early recovery with rises of 0.8 per cent to $2,081 and $18,346 a tonne, respectively.
Technical analysts are keeping a close eye on crude oil prices, which have threatened to break down through key support levels, and also on US petrol prices ahead of the expiry of Nymex gasoline and heating oil contracts on Friday.
Nymex March West Texas Intermediate added 28 cents at $73.92 a barrel, while ICE March Brent rose 30 cents at $72.43 a barrel.
With the speculative net long position (bets on price gains) in crude near record levels, one trader said oil bulls would be hoping that WTI would hold above $74.40 by the close for the week, while $72 is seen as a key support level for Brent.
The expiry of the Nymex February petrol and heating oil contracts could also have a bearing on crude prices.
Traders pointed out that US petrol prices have been the weakest part of the complex with gasoline moving from a premium to a discount with heating oil prices this week and refiners profit margins for producing petrol coming under strong pressure.
Large speculators have also been holding record net long positions (bets on price gains). However, the decline in open interest (active positions) over recent sessions suggests that hedge funds have been reducing these bets.
Nymex February RBOB unleaded gasoline was fractionally higher at at $1.9240 a gallon, but liquidity has already shifted in the March contract, the benchmark from Monday, up 0.8 cents at $1.9337 a gallon.
Nymex February heating oil added 0.5 cents at $1.9245 a gallon and, similarly, liquidity has already shifted in the March contract, the benchmark from Monday, up 0.1 cents at $1.9434 a gallon.
Gold struggled for momentum, becalmed around $1,084 a troy ounce, after ending Thursday’s session in New York at $1,085.90. Trader said the dollar’s reaction to US GDP data due out later in the session might add some greater impetus to bullion trading.
