Copper futures were lower on Monday, as traders digested a series of manufacturing reports out of China and the euro zone in an attempt to gauge the strength of the global economy.
Manufacturing numbers are used as indicators for demand growth because of its widespread uses across industries. On the Comex division of the New York Mercantile Exchange, copper futures for December delivery traded at USD3.291 a pound during European morning trade, down 0.9%.
Copper prices fell by as much as 1.65% earlier in the day to hit a session low of USD3.265 a pound, the weakest level since September 18. The December contract settled 0.8% lower at USD3.320 a pound on Friday. Copper prices were likely to find support at USD3.206 a pound, the low from September 18 and resistance at USD3.359 a pound, the high from September 20.Data released earlier in the day showed that manufacturing output in the euro zone was weaker than expected this month. The preliminary reading of the euro zone manufacturing purchasing managers' index fell to 51.1 in September from a final reading of 51.4 in August. Analysts had expected the index to inch up to 51.8.
Germany's manufacturing PMI fell to 51.3 in September from a final reading of 51.8 in August, compared to expectations for an improvement to 52.2.
A separate report showed that manufacturing activity in France contracted at the fastest pace in three months in September.
Europe as a region is third in global demand for the industrial metal. Prices remained supported after data showed that China's HSBC Flash Purchasing Managers Index rose to a six-month high of 51.2 in September from a final reading of 50.1 in August.The measure remained above the 50.0-mark for the second consecutive month, indicating expansion in manufacturing activity.
Copper traders consider shifts in the HSBC PMI an indicator of China's copper demand, as the industrial metal is widely used by the sector. The Asian nation is the world's largest copper consumer, accounting for almost 40% of world consumption last year. Meanwhile, uncertainty over the direction of Federal Reserve policy weighed, following last week's surprise decision to announce no reduction to its USD85 billion-a-month stimulus program. St. Louis Fed President James Bullard said Friday that a small tapering of bond purchases is "possible" at the central bank's October meeting.
The Fed decided to leave its USD85 billion-a-month stimulus program unchanged. The decision surprised markets, which had been expecting the central bank to taper its monthly stimulus program by USD10 billion to USD15 billion.The central bank's stimulus program is viewed by many investors as a key driver in boosting the price of commodities as it tends to depress the value of the dollar.
Crude oil futures fell on Monday amid reports that Libyan oil output continues to normalize while thawing U.S.-Iranian tensions pushed down prices as well by allaying fears of conflicts erupting in the Middle East and threatening global supply. On the New York Mercantile Exchange, light sweet crude futures for delivery in November traded at USD103.52 a barrel during U.S. trading, down 1.17%. The November contract settled down 1.05% at USD104.75 a barrel on Friday.
The commodity hit a session low of USD103.16 and a high of USD105.10.
Reports that Libyan oil production is on the rise after protesters reopened access to facilities late last week sent oil prices falling on Monday. Waning concerns the U.S. will attack Syria also allowed for price declines as did thawing tensions between Syrian ally Iran and the U.S. Iran has reportedly freed 80 political prisoners before President Hassan Rohani's upcoming trip to the United Nations.
Oil prices shot up in recent weeks over fears the U.S. was planning to attack Syria for its alleged use of chemical weapons in its civil war, though diplomatic efforts to resolve the crisis appear to be working, which continues to soften oil prices.