Copper prices rose to their highest level in more than two weeks Wednesday, pushed higher by supply concerns and a jump in oil prices.
Copper for December delivery, the most actively traded contract, was recently up 1.7% at $2.3950 a pound, the highest price since Sept. 21.
The global copper market will be tighter than previously forecast this year thanks to production cuts in mines around the world, the International Copper Study Group, or ICSG, said at the conclusion of its Oct. 6 meeting. Supply and demand will likely be balanced this year, the Institute said in a press release, revising a previous forecast of 360,000 ton surplus. Next year will see a deficit of 130,000 tons, compared with prior expectations of a 230,000 ton supply glut.
“The appraisal of the ICSG would justify significantly higher copper prices,” analysts at Commerzbank said in a note to clients.
Chile’s Collahuasi mine, the world’s largest copper mine by output, said last week that it will reduce production by 30,000 metric tons a year in response to low prices. The mine accounted for 6% of global production in 2014. Last month, embattled mining giant Glencore said it would shut two of its African mines in a bid to slash its debt, taking an additional 400,000 metric tons out of the copper market over the next 18 months.
The supply cuts have helped lift prices for the industrial metal from more than six-year lows reached on worries about demand from China, the world’s largest copper consumer.
Copper prices were also boosted Wednesday by a surge in prices for oil, which gained Wednesday after an industry trade group reported an unexpected drop in U.S. crude supplies and government forecasters called for stronger global demand growth.
Crude oil prices climbed have been climbing on signs of ebbing U.S. production and increasing willingness among the major oil producers to collectively jump-start the market amid the prolonged price slump. Many investors trade copper and oil as part of a broader commodities basket, with oil making up the largest part of the basket.