Copper Gains Despite Oil Rally

NEW YORK—Stronger U.S. durable-goods data and an improving labor market helped copper to its first gain in four sessions.

Copper slipped to a one-month low Wednesday as traders tried to gauge the extent to which soaring oil prices would crimp global economic growth. Oil prices had been boosted by turmoil in Libya. The North African nation is a key oil exporter but isn't a major copper producer.

Copper prices are correlated to economic performance because the metal is used to manufacture wires, pipes and sheets for electronics, appliances, automobiles and buildings.

The contract for February delivery rose 5.3 cents, or 1.2%, to $4.3265 a pound on the Comex division of the New York Mercantile Exchange. The most actively traded copper contract, for March delivery, rose 5.1 cents, or 1.2%, to settle at $4.3265 a pound.

"We're slowing down the panic pricing," said Sterling Smith, market analyst at Country Hedging. "Most of the bearishness will shake itself out."

Better-than-expected numbers on durable goods orders and jobless claims helped snap the metal's losing streak even though U.S. oil futures topped $100 a barrel amid unrest in Libya. The price of oil later fell back under the burden of robust petroleum inventories in the U.S., further boosting copper.

As recovering economies eat up more of the metal and mine supplies remain constrained, analysts are forecasting a copper-market deficit of as much as 825,000 tons this year.

That view, and a recovering appetite for riskier assets like industrial commodities and equities, helped send copper to an intraday record of $4.6495 earlier this month before it began to sell off as traders booked profits, warehouse inventories rose substantially and Middle East tensions boosted oil prices.

On Thursday, the tumult in Libya and the Mideast also helped push the U.S. dollar lower, further supporting copper prices by making the dollar-denominated metal less expensive for foreign buyers, helping demand.

Inventories of copper stored in London Metal Exchange warehouses rose 975 metric tons Thursday, leaving them at 412,675 tons. The most recent Comex inventory data, released late Wednesday afternoon, were up 473 short tons at 81,153 short tons.

In other commodity news:

SUGAR: IntercontinentalExchange Inc. moved to rein in spikes in sugar prices, saying in a notice that, effective March 1, it would cancel trades in raw-sugar futures that fall "outside an acceptable price range" in the event of a sharp price swing. Raw-sugar futures bounced back from 11-week lows set in early trade after the European Union approved importing 300,000 metric tons of sugar duty-free. Sugar for March delivery settled 0.9%, or 0.28 cents, higher at 30.22 cents a pound.

GOLD: Gold's rally slowed as investors scrutinized the economic risks of an unstable Middle East and higher oil prices. The February-delivery contract settled up 0.1%, or $1.90, at $1,415.30 per troy ounce. The most actively traded contract, for April delivery, settled up 0.1%, or $1.80, at $1,415.80 per troy ounce. The unrest has been a boon for gold, which is considered a store of value amid political and economic instability, but as prices get closer to record levels, investors are turning a more critical eye on what is pushing the precious metal higher.

(Source: http://online.wsj.com/article/SB10001424052748703408604576164722657529578.html?mod=googlenews_wsj)