A lack of recovery in physical rubber prices, despite a series of rubber-buying interventions by the International Natural Rubber Organisation (Inro) this week, proved how bearish market sentiment was and strengthened a pessimistic view among operators about the outlook for rubber prices, they said.

Inro conducted rubber-buying intervention in Malaysia, Thailand and Indonesia on Thursday for the third day this week, as the organisation's five-day moving average was below the "must-buy" level of 172 Malaysia/Singapore cents a kg.

The actual tonnages purchased by Inro were unknown, but one Asian dealer estimated Inro purchased about 500 tonnes of SMR20, 500 tonnes of STR20 and more than 1,000 tonnes of RSS3.

"Inro intervened in the rubber market three times this week, but prices were still below the 'must-buy' level. I don't feel that Inro is firmly determined to boost rubber prices," one trading company official said.

"Asian rubber traders did not expect much of Inro intervention, as they understand Inro cannot rescue the market given the current oversupply trend," he added.

The official said supplies are ample due to a seasonal factor, while demand is slack ahead of the year-end.

Market fundamentals are unlikely to improve much next year, with a slowdown expected in the economy of the United States, the world's largest rubber consumer, and while there are only slim chances for a recovery in Japan's economy, he said.

"The whole commodities sector is under deflationary pressure. Rubber also cannot avoid the threat," he said. "It will take time before the market begins a full-fledged recovery."

On the Tokyo Commodity Exchange (Tocom), benchmark May rubber futures were down 0.1 yen per kg at 83.1 yen at midday on Friday, after ranging from 82.5 to 85.4 yen this week.

A brokerage analyst said the contract is set to test key support for the Tocom benchmark rubber at 78.3 yen, a level not seen since December 17 last year.

"It is too early to say if the market has confirmed the bottom. Tocom rubber will achieve the downside target if the dollar continues its downswing, say below 115 yen," he said. In the currency market, the dollar traded around 117 yen by Tokyo midday on Friday, with its underlying trend remaining weak amid overnight falls on Wall Street and concerns over the possible impeachment of US president Bill Clinton.

Operators are also watching to see whether Thailand will decide to withdraw from Inro, as they expect a withdrawal of the world's biggest rubber producer would lead to dissolution of the organisation.

On the Osaka Mercantile Exchange, benchmark May rubber futures were up 0.3 yen at 83.0 yen at Friday midday.

Open interest of Tocom rubber futures, a barometer of the contracts' popularity among investors, were 213,860 lots at the end of Thursday trade, against 213,826 lots a week ago.

Crude rubber stocks at Japanese private warehouses were 29,979 tonnes as of November 30, down from 30,568 tonnes as of November 20, data released by the Rubber Trade Association of Japan this week showed.

Thai rubber was offered to Japan at 65.50 US cents per kg on an FOB basis on Friday, against 66 US cents a week ago.

In the local physical market, benchmark Thai rubber for large-lot end users was quoted at 82 yen per kg on Friday, against 83 yen a week earlier.