Copper prices snapped a four-day winning streak Wednesday as civil unrest in the Middle East and higher oil prices raised fears of lower global demand for the metal.
Rising energy costs limit the amount of discretionary spending consumers have left for items like iPads, air-conditioners and cars, which contain copper.
The most actively traded contract, for May delivery, settled down 0.3%, or 1.15 cents, at $4.4980 per pound on the Comex division of the New York Mercantile Exchange.
The front-month contract, for March delivery, was down 0.2%, or 1.05 cents, at $4.4800 per pound.
Political instability in the Middle East weighed on copper prices Wednesday. Violent clashes between antigovernment protesters and security forces continue in oil-producing Libya, while Yemen is struggling with antigovernment demonstrations which have grown steadily over the past month.
"The broader financial markets remained nervous, watching reports from North Africa and the Middle East where political tensions are still the centre of attention," traders at Sucden Financial said in a note to clients.
Civil unrest in the key oil-producing region has again pushed crude oil prices above the psychologically important $100 a barrel mark last seen in late 2008.
Oil's rally raised concerns that higher energy costs will damp economic growth and crimp global demand for copper, forcing red metal prices to retreat in recent days.
"Copper is used in housing, cars, manufactured goods. and demand for that type of stuff will drop as consumers clamp on spending to adjust for higher gasoline prices," said Matt Zeman, head of trading at Kingsview Financial in Chicago.
Higher inflation rates, as a result of higher oil prices, are another emerging risk to copper prices. Since central banks tend to curb inflation by raising interest rates and slowing economic activity, this poses another major risk to copper demand.
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