Natural Rubber Futures Little Changed Amid Rally in Crude Oil

March 10 (Bloomberg) -- Natural rubber futures traded little changed after advancing for three of the past four days as higher crude oil prices increased the cost of making the rival synthetic product.

Futures in Tokyo gained as much as 0.4 percent. Oil in New York climbed for a third day after Saudi Arabia told Asian refiners that it will reduce supplies next month. U.S. stocks fell after Warren Buffett said the economy “has fallen off a cliff” and the World Bank predicted a global contraction.

“Higher oil provided support to futures, but investor appetite for risk assets was low because of a sell-off in global equities,” Shuji Sugata, research manager at Mitsubishi Corp. Futures & Securities Ltd., said today by phone.

Rubber for August delivery, the most-active contract, added 0.1 percent to 137.6 yen a kilogram ($1,392 a metric ton) on the Tokyo Commodity Exchange at the 11 a.m. local time break.

Futures often move in the same direction as oil as synthetic rubber is made from naphtha, distilled from petroleum. Crude oil in New York rose 3.4 percent to close at $47.07 a barrel yesterday, the highest settlement since Jan. 6.

The Organization of Petroleum Exporting Countries has cut production targets three times since September to combat price declines and prevent a glut on world markets. There is speculation the group will decide to reduce output when ministers gather in Vienna on March 15.

Rubber futures were also supported by the first increase in India’s passenger-car sales in five months in February.

Sales rose 22 percent from a year earlier to 115,386, the Society of Indian Automobile Manufacturers said in a statement yesterday in New Delhi. Lower auto-loan rates spurred demand for the hatchbacks of Maruti Suzuki India Ltd., Hyundai Motor Co. and General Motors Corp.

Gains in rubber were curbed as a slump in global equities deepened concern a worsening recession may cut raw material demand further.

July-delivery rubber on the Shanghai Futures Exchange, the most-active contract, rose 1.2 percent to 12,240 yuan ($1,790) a ton at 11:29 a.m. local time.

To contact the reporter on this story: Aya Takada in Tokyo atakada2@bloomberg.net.