Tokyo rubber futures were firmer on Wednesday, extending gains into the second day as buying continued near five-month lows. A rise in crude oil prices to a 10-month high-lent support to the Tokyo market. Higher oil usually encourages the use of natural rubber instead of synthetic rubber.
A petrochemical product, the benchmark Tokyo Commodity Exchange rubber contract for December delivery was trading up 0.3 yen a kg at 247.5 yen. The key contract on Monday fell as far as 242.9 yen, the lowest for any benchmark since January 10 and roughly a halfway retreat from a 114-yen rally earlier this year from a November low.
Rubber supply is expected to recover in coming weeks as it is typically the season when rubber tapping is in progress, possibly capping the topside around 260 yen. Also, TOCOM rubber remained bearish on the charts in the long run, with the key contract staying below its 200-day moving average for the fourth day in a row.
The average stood at 254.2 yen as of Tuesday's close. London Brent crude, seen as the best price gauge of the global oil market, rose above $73 a barrel on Tuesday, the highest since late August, on strong summer driving demand in top consumer the United States.
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