~*~Mining and Metals Du Jour~*~

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DJ BASE METALS: Copper Prices Jump As Oil Stabilizes
NEW YORK, Feb 25, 2011 (Dow Jones Commodities News via Comtex) -- By Matt Whittaker

Copper futures continued their bounce Friday as steadying oil prices calmed some fears about industrial demand for the metal.

The most widely held contract, for May delivery, was recently up 6 cents, or 1.4%, at $4.4035 a pound on the Comex division of the New York Mercantile Exchange.

"Even with all the oil crisis, the world's not ending," said Ira Epstein, director of the Ira Epstein division of the Linn Group. "You've put a near term bottom in the [copper] market."

Copper had fallen to a one-month low earlier this week amid fears surging oil prices would become a drag on the global economic recovery and could spark monetary tightening to head off potential inflation.

The steadying oil prices assuaged some of those worries, allowing participants to return their focus to the expected continued uptick in demand for copper as new mine supply remains constrained. Analysts are forecasting a copper-market deficit of up to 825,000 tons this year.

That view was supported Thursday as stronger U.S. durable goods data and an improving labor market helped copper to its first gain in four sessions despite the rising oil prices.

Nymex April crude was recently unchanged at $97.28 a barrel as fears over supply shortages from a disruption to Libyan crude exports started to ebb.

As much as 75% of Libya's oil production may have stopped as rebel forces clash with the country's leader, Moammar Gadhafi. However, European refineries that use Libyan crude are likely to source other oil available in the Mediterranean region, including production from Algeria and Azerbaijan, while members of the Organization of Petroleum Exporting Countries could also raise production to make up for the short-fall.

Meanwhile, inventories of copper stored in London Metal Exchange warehouses rose 4,150 metric tons Friday, leaving them at 416,825. Once-a-week data released on Fridays by the Shanghai Futures Exchange showed a weekly decline of 2,961 metric tons to 158,101. The most recent Comex inventory data, released late Thurday afternoon, showed an increase of 1,103 short tons at 82,256 short tons.

-By Matt Whittaker, Dow Jones Newswires; 212-416-2139; [e-mail]

(END) Dow Jones Newswires

02-25-11 1002ET

http://news.tradingcharts.com/futures/4/9/154010294.html