Copper Sinks As Oil Tops $100

NEW YORK, copper prices snapped a four-day civil unrest in the Middle East and North Africa, with oil prices, raised fears of reduced global demand for the metal.
Rising energy costs limit the amount of money you have available to spend on items such as iPads, air conditioning and cars, which contain copper.
The most actively traded contract for delivery in May, set 0.3%, or 1.15 cents to $ 4.4980 per pound on the Comex division of the New York Mercantile Exchange.
The contract for the next month for March delivery fell 0.2%, or 1.05 cents to $ 4.4800 per pound.
Violent clashes between protesters and security forces continue producing oil from Libya, Yemen is struggling with the anti-government protests that have grown steadily over the last month.
"The financial markets generally remained nervous, watching the reports from North Africa and Middle East, where political tensions remain at the center of attention," said Sucden Financial operators in a note to clients.
Civil unrest in the key region for oil production has returned to raise oil prices above the psychological mark of $ 100 a barrel seen in late 2008.
"Copper is used in housing, cars, manufactured goods. And the demand for that kind of stuff will fall as consumers clamp on spending to adjust gasoline prices higher," said Matt Zeman, head of financial operations Kingsview of Chicago.
The higher inflation rates as a result of higher oil prices are other emerging risk to copper prices. Since central banks tend to curb inflation by raising interest rates and slowing economic activity, this raises another important risk for copper demand.
"As a result of rising inflationary pressures, interest rates rose in rapid succession over the coming months in a number of countries, leading to slower growth ahead of the second half of the year," wrote Edward Meir, analyst commodities with MF Global.
Despite Wednesday's decline, copper prices remain near record highs of $ 4.6375 a pound, set Feb. 14. The metal prices have risen almost 35% over last year as analysts forecast global demand this year will exceed mine supply.
Moreover, copper futures, denominated in dollars, are benefiting from the recent weakness of the dollar, which makes the contracts appear cheaper to buyers in foreign currency.
"The dollar has not received much of a career as a safe haven makes you come very attractive in terms of currency," said Dan Cook, CEO and senior market analyst at IG Markets. "While the dollar remains relatively weak, it must support high copper prices."

(Source: http://online.wsj.com/article/SB10001424052748703559604576176351797075040.html)