Dec 23, 2011 -- Aluminum and copper traders probably closed out bets that metal prices will fall as the number of outstanding contracts declined while prices gained.
Open interest in London Metal Exchange aluminum futures fell by 143,279 contracts to 1.45 million lots in the week ended Dec. 21, according to bourse figures. Aluminum for three-month delivery, the benchmark contract, rose 1.6 percent in that period. Open interest rose to a record 1.6 million lots on Dec. 16.
Open interest in copper futures fell by 27,050 contracts to 468,842 lots while prices gained 3.4 percent on the LME. Each contract represents 25 metric tons of the metal.
Falling open interest and higher prices suggest short covering, according to Macquarie Group Ltd. Short covering denotes purchases to close out bets on lower prices.