TOKYO, Sept 29 (Reuters) – Benchmark Tokyo rubber futures rose as an overnight rally in oil prices boosted risk appetite, but gains were capped amid growing scepticism on how OPEC would implement a plan to curb output, which weighed on oil prices on Thursday. Although the Organization of the Petroleum Exporting Countries agreed on Wednesday to modest production cuts, how much each country will produce is to be decided at the next formal OPEC meeting in November.
The Tokyo Commodity Exchange (TOCOM) rubber contract for March delivery JRUc6 0#2JRU: ended 1.3 percent higher, gaining 2.2 yen, at 166.8 yen ($1.64) per kg, retreating from a high of 168.8 yen hit earlier in the session. WTI crude CLc1 dropped 4 cents to $47.01 a barrel on Thursday, after hitting $47.47, its highest since Sept.8, earlier in the day.
The U.S. oil benchmark had risen $2.38, or 5.3 percent, on Wednesday. Oil futures soared nearly 6 percent on Wednesday following the OPEC deal to limit crude output to 32.5-33.0 million barrels per day (bpd), compared with about 33.5 million bpd estimated by Reuters to be the output level in August. O/R “It seems there is a resistance for the TOCOM benchmark at near 170 yen mark,” said Toshitaka Tazawa, an analyst at Fujitomi Co.
“If OPEC can agree on specific plans to trim output and WTI crude reaches $50 a barrel, the TOCOM will be able to move above the 170 yen level,” he said. The TOCOM benchmark, which sets the tone for tyre rubber prices in Southeast Asia, had risen to as high as 170.9 yen last week, a level it has not seen since mid-May, but it surrendered some of gains this week as investors booked profits. The most-active rubber contract on the Shanghai futures exchange for January delivery SNRcv1 slid 80 yuan to end at 13,325 yuan ($1,998.35) per tonne. The front-month rubber contract on Singapore’s SICOM exchange for October delivery STFc1 last traded at 135.0 U.S.cents per kg, unchanged from the previous day.
($1 = 101.5100 yen) ($1 = 6.6680 Chinese yuan)
(Reporting by Yuka Obayashi; Editing by Amrutha Gayathri)