Copper keeps rising as China uses more

Copper rose for a third consecutive session Thursday after industrial production unexpectedly accelerated in China, the world's largest user of the metal, and on speculation that strikes in Chile would disrupt supplies.

Nickel slipped while aluminum and zinc gained.

China's output increased 18.1 percent in May from a year earlier, the National Bureau of Statistics said Wednesday, after gaining 17.4 percent in April.

That beat the 17 percent median estimate of 19 economists surveyed by Bloomberg News.

Contract workers at the Codelco mine in Chile, the world's largest copper producer, plan to strike June 20, a labor leader said.

"This kind of production growth is positive for metals," David Thurtell, a London-based analyst at BNP Paribas, said. "Possible strikes in Chile are also helping."

Copper for delivery in three months on the London Metal Exchange gained $123 to $7,321 a metric ton.

The metal used in power cables and wiring has dropped 10 percent since trading at an 11-month high of $8,335 a ton on May 4.

Inventories tracked by the LME fell for a 19th consecutive session, slipping 0.7 percent to 119,075 tons, the exchange said. That is the lowest since Oct. 23.

China is increasing domestic production to meet rising demand. China, the world's most populous nation, increased copper output 17 percent in May from a year earlier, to 278,000 metric tons. That beat the previous record of 274,000 tons in April.

The planned walkout by contract workers at state-owned Codelco would hamper company output, said Cristián Cuevas, president of the Confederation of Copper Workers, a group representing contract employees. The workers are demanding more pay.

At Doña Inés de Collahuasi, one of the largest copper mines in Chile, workers will not return to talks unless the owners, Xstrata and Anglo American, submit a new wage offer, said Pedro Díaz, the treasurer of a union.

Nickel fell $200, to $40,025 a ton.

Nickel's 14-day relative strength index, used by some investors to gauge price direction, fell to 29.7 on Wednesday. A reading below 30 typically signals prices may advance.

That was the first time the index had fallen below 30 since November 2005. The index jumped to 38.5 on Thursday.

Nickel has lost 18 percent since trading at a record $51,800 a ton on May 9.

Crude oil rose above $67 a barrel in New York and gasoline jumped after a government report showed that U.S. refineries had unexpectedly cut operating rates and Iran said that it was not willing to suspend its nuclear program.

Refineries operated at 89.2 percent of capacity last week, the lowest level since May 4 and the lowest in 15 years for the second week in June, an Energy Department report showed Wednesday.

Iran said its nuclear research was advancing. The United States has accused Iran of developing nuclear weapons.

Concern that the dispute over Iran's nuclear program might disrupt shipments from the country and the curtailment of supplies from Nigeria has bolstered prices since January 2006.

Crude oil for July delivery rose $1.39 to $67.65 a barrel on the New York Mercantile Exchange, the highest since June 7. Prices are down 2.8 percent from a year ago.

"Refineries should be operating at 95 percent of capacity right now as we approach July 4 and peak demand," said Michael Fitzpatrick, vice president for energy risk management at Man Financial in New York. "We aren't building a gasoline supply cushion against disruptions and glitches."

Gasoline for July delivery in New York rose 6.94 cents to $2.2247 a gallon.

"It looks like we built in too bearish an expectation in advance of the report," said Tom Bentz, an oil broker with BNP Paribas in New York. "It's questionable we'll break out of this range. There will have to be a strong close today to confirm that there's been a reversal."

Gasoline inventories rose 3,000 barrels to 201.5 million in the week that ended June 8, the report Wednesday showed. A gain of 1.5 million barrels was expected, according to the median of 16 responses in a Bloomberg News survey.

U.S. energy prices jumped 4.1 percent last month, the biggest increase since November.