After failing to break clear above well-signposted resistance at 2930 on Wednesday, aluminium skidded lower on Thursday. Nickel was the only standout among the LME set, with the rest of the base complex seeing technical liquidation, pressured by falling oil prices and weaker precious metals. Technicians Cliff Green Consultancy had suggested that aluminium's 'failure' to surmount 2930 could inspire a test of support put at 2790/2800, though ever-present outright buying for Dec 2011 provided a floor at 2820 basis 3-months.
The loss of a weekend's worth of contango saw C-3m tighten up by $2.50, while forward backwardations eased by $1.00-$1.50/mth to the end of 2010, with month-to-month rates in 2011 firming somewhat. This morning locals noted better bids on nearby carries, with today expected to be the last day of forward rolls by the influential GSCI index. The LME WC warrant banding report had at time of writing not been updated.
On Friday morning trading was again lackluster, the light metal slipping back from an early high at 2840 to 2810 and last changing hands c. 2820 on turnover of 1,700 lots. A decisive breach below nearby support at 2790 signalled falls towards 2720, CGC wrote last night, though with options exposure running at high levels and Dec 2011 in demand from 'influential' buyers, this hardly looked a forgone conclusion as we signed off for the week.
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