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Comex copper futures ease to close lower

NEW YORK: comex copper futures were unable to garner any upside momentum after taking an early stab at the upside, and subsequent technical selling pushed prices down to a lower close for the third session in a row.

March ended off 0.10 cent at 84.15 cents a lb after trading between 83.50 and 85.30 cents. January and February closed off 0.05 cent at 83.65 and 83.70 cents, respectively.

"There hasn't been much fundamental news to change copper's outlook. It's really been supported by funds and technical buying," said David Rhinehimer, commodity analyst with Salomon Smith Barney.

"With the rally and lack of upside potential, it's just a correction. Aluminum had some influence for a period of time," he added.

Traders said if the market pushes up through 85.00 cents in the March contract, 86.00 could be achieved but if it falls below 84.30 cents, the market could head back down to the 78.00 cent level.

"It got to a point where it just ran out of gas and is just correcting a bit. The question really is how strong demand growth is going to be," said Rhinehimer. He placed support for the March contract at 83.25 cents, followed by 82.00 cents.

During its past two sessions, copper struggled to crawl higher but technical and fund selling kept a lid on any significant rise.

After hitting an upside breakout point last week at 87.30, the recent jump in LME stocks just dampened sentiment in an already slightly overextended market, said traders.

In London, copper hit $1,887 in morning trade, joining aluminum's jump in prices but fund liquidation prodded prices to close down $29 at $1,853 a tonne.

The 17,350-tonne jump in LME copper stocks on Monday spooked the market a bit, sending prices downward. LME stocks were up again Wednesday at 807,450 tonnes, rising 2,375 tonnes. On Tuesday, LME stocks were up 1,850 tonnes to 805,075 tonnes.

The three-months aluminum price on the LME jumped higher in early trading on concern about Russian exports. The price was reacting to news that a Russian regional court has blocked exports from Novokuznetsk, Russia's fifth largest aluminum producer.

Chartists are placing nearby resistance levels at 85.00 cents, followed by 88.50 cents up to the 89.00 cent level for March delivery. Support nearby is at 84.30, followed by 83.80 cents.

Final estimated volumes for copper reached 16,000 contracts, compared with an official turnover of 20,910 contracts on Tuesday and 9,547 on Monday.

The nine-day relative strength index for March copper ended nearly unchanged from its previous close at 26, compared with 27 at the close of business Tuesday.

Technical analysts usually interpret an RSI reading of 70 or higher as indicating overbought conditions and 30 or below as oversold.-Reuters