The Price of Copper Hit Three-year Lows After Oil Price Drop
Copper prices on Monday hit their low in more than three years after the collapse of crude oil prices. The latter was caused by the impact of the coronavirus and disagreement between Russia and OPEC to reduce crude prices. Still, the prices began to rebound later because of investor confidence that China will approve large stimulus measures.
The barrel of crude oil lost a third of its value, and global actions also suffered the impact after Saudi Arabia launched a price war with Russia, raising nervousness among investors already concerned about the outbreak of the coronavirus. Saudi Arabia decreased its official selling price and announced plans to increase production. The cut to the prices the world’s largest oil exporter applied is the most massive over the past 20 years.
The price of Brent crude plummeted almost 30% during the opening of markets in Asia on Monday and flies over the US $ 30 a barrel.
Energy is a prominent component in mining costs, so lower oil prices affect the price structure of metals.
In times of volatility, investments seek refuge in gold, German and US debts, and the dollar.
Market expectations remain negative
Three-month copper at the London Metal Exchange (LME) lost 3.1% to the US $ 5,433 a ton, its lowest level since December 2016. However, it later recovered some losses and yielded 2.6%, at the US $ 5,459, at 1145 GMT.
Copper did not suffer the sales wave that could be expected after falling below a key technical area between the US $ 5,450 and the US $ 5,500, said Ole Hansen of Saxo Bank in Copenhagen.
Copper did not suffer the sales wave that could be expected after falling below a key technical area between the US $ 5,450 and the US $ 5,500, said Ole Hansen, head of raw materials strategy at Saxo Bank in Copenhagen. He said that at the moment, there’s not much appetite for an accelerated sale below that point. Half of the demand comes from China, and there is an increased expectation that it will trigger stabilized growth, and it seems that the market is clinging to that belief.
Aluminum yielded 1.3%, to US $1,664 a ton, its lowest level since October 2016; nickel was down 3.2%, to US $12,425; zinc lost 2.7% to US $ 1,931.50 – its minimum since June 2016.
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