Copper traders are the most bullish since October as global inventories at a two year low add to signs that demand is improving.

Sixteen of 28 analysts surveyed by Bloomberg expect the metal to advance next week, the first positive outlook in three weeks and the highest proportion since October 14. Global copper stockpiles monitored by exchanges in London, Shanghai and New York fell 22% since March and this month were at the lowest level since October 2009.

Goldman Sachs Group Inc said that European copper demand will rebound after this quarter and prices will climb 26% in the next 12 months. The European Central Bank awarded a record EUR 489 billion to euro area banks for three years on December 21 to keep credit flowing amid a debt crisis that helped wipe more than USD 10 trillion from the value of equities since May and pushed copper down 21% this year.

Mr Nikos Kavalis an analyst at Royal Bank of Scotland Group Plc in London said that “Reported inventories have been declining very aggressively, and the indication suggests that the market is still tight. Copper is going to have decent, if unspectacular, growth rates. Supply is still constrained.”

Copper is down 25% from a record USD 10,190 a metric tonne in February at USD 7,613.25 on the London Metal Exchange and heading for the first annual drop since 2008. The Standard & Poor’s GSCI Index of 24 commodities rose 2.3% as the MSCI All-Country World Index of equities fell 9.7%. Treasuries returned 9.3% a Bank of America Corp index shows.

(Sourced from Bloomberg)