Oil Report

Tokyo rubber jumps to near 3-wk high on firm oil

TOKYO, April 3 (Reuters) - Tokyo rubber futures rose by 1.7 percent to a near three-week high on Thursday as strong commodities prices, such as crude oil and gold, spurred buying.

As of 0057 GMT, the benchmark Tokyo Commodity Exchange rubber contract for September delivery <0#JRU:> was trading up 3.8 yen at 288.7 yen per kg.

It jumped 1.7 percent to a peak of 289.8 yen, the highest since March 17.

U.S. crude oil futures steadied near $105 a barrel, keeping the gains of almost $4 made a day earlier, supported by U.S. government data that pointed to a steep draw in U.S. gasoline inventories.

Rubber prices often benefit from high crude oil prices because investors believe expensive oil will encourage a shift to natural rubber from synthetic rubber, a petroleum product.

The dollar remained pressured after Federal Reserve Chairman Ben Bernanke said on Wednesday that the U.S. economy may fall into recession in the first half of 2008, cooling hopes that the worst of the credit crisis is over.

The dollar was steady against the yen at 102.30 JPY=.

In the physical market, the wintering dry season when latex output falls and tapping is disrupted is coming to an end in Thailand, the world’s top producer.

However, supplies are expected to remain fairly tight until full-scale tapping resumes in the second half of April after Thailand returns from a holiday.

In industry news, Indonesia, the second largest rubber producer, is likely to see a 4 percent rise in natural rubber exports this year, down from nearly 5 percent in 2007, due to the U.S. economic slowdown, an industry official said on Wednesday.

Indonesia exported 2.41 million tonnes of natural rubber in 2007, up 4.78 percent from 2006, with the United States the top buyer at 800,000 tonnes. (Reporting by Miho Yoshikawa)