Oil bounced modestly, gold fell heavily as markets regained their poise on Tuesday after Monday’s capitulation.
Silver fell, but copper and iron ore ended the session higher.
The bounce came after President Donald Trump said that the White House and Congress would meet to consider ‘very substantial’ economic relief measures to combat the coronavirus, boosting positive sentiment.
But Tuesday’s rebound for oil is was modest, around 40% of Monday’s 24% plunge and underlined just how damaged sentiment really is in the wake of the collapse of the production cap sharing deal between Russia and the Saudi dominated OPEC.
The original cap deal is due to end at the end if this month and analysts say it will be open slather.
West Texas Intermediate crude for April delivery rose $US3.23, or 10.4%, to settle at $34.36 a barrel in New York.
Monday saw WTI crude futures, the US benchmark oil slumped $US10.15, or 24.6%, to end at $US31.13, after briefly trading below $29 in early trade.
In Europe, May Brent crude rose $US2.86, or 8.3%, to $US37.22 a barrel. On Monday, the global marker crude plunged $US10.91, or 24.1%, to settle at $US34.36 a barrel.
“If one were to look for a silver lining from an oil price crash that took as much as 30% from its valuation within moments of the market open for the week is that it should have helped the commodity to find its bottom,” wrote Jameel Ahmad, global head of currency strategy and market research at FXTM, in a note Tuesday.
Analysts said corporate debt markets re-opened on Tuesday after being closed off by Monday’s slump in oil prices.
Monday’s percentage fall for both crudes were the largest since January 1991 during the Gulf War. Tumbling oil prices came after Saudi Arabia over the weekend cut its export prices for crude in a move many saw directed at Russia’s refusal to back OPEC’s output cut plan.
The easing in pressures will see oil companies – especially frackers – start raising new debt and refinancing existing loans. But the cost will be much higher than it was before prices starting falling last week.
Up to Monday, global oil prices had fallen 34% in four days. That, in turn, saw corporate debt markets for oil companies tighten up, leaving many companies exposed.
Meanwhile, gold prices fell sharply as confidence return to markets on Tuesday.
In New York, Comex gold for April delivery on Comex lost $US15.40, or 0.9%, to settle at $US1,660.30 an ounce, after posting a 0.2% gain on Monday. Gold fell again after trading had settled to be around $US1,647 an ounce in early Asian dealings. At that level, it is down around 1.7%.
Comex May silver fell by 9.9 cents, or 0.6%, at $US16.955 an ounce, after falling 1.2% a day ago.
Comex copper for May delivery added 0.4% to $US2.5215 a pound. It had fallen to just over $US2.50 a pound on Monday
And iron ore prices had a big rise on Tuesday – up 5% or $US4.13 to $US92-09 a tonne fr 62% Fe fines delivered to northern China.
Continuing production and export problems in Brazil due to wet weather and unexpectedly stronger demand for steel this month and next in China were the factors cited for the big gain.
