RTRS: Crude Oil, Metals See Muted Rise As Recession Storm Clouds Dampen Bid
A sharp interest rate cut by Australia and a weaker U.S. dollar helped oil, gold and copper prices rebound Tuesday, but the broad outlook for commodities remained damp due to growing fears of a global recession.
Crude oil jumped more than 2% to return to above $90 a barrel, while gold and copper rose more than 1% each, all in New York trade.
Agricultural futures in Chicago ended mixed, with corn and soybeans rising marginally after Monday's sharp losses and corn extending falls.
Cocoa and sugar closed up in New York, and coffee settled at 13-month lows.
"It is very difficult to write anything meaningful about the markets at this stage, as we seem to be drifting in and out of panic mode," wrote Edward Meir, a commodities analyst at MF Global in New York.
"Buyers are sitting on their hands, while sellers are liquidating positions and fleeing towards the safety of cash," Meir said.
Oil fell 6% to eight-month lows Monday, while copper slumped 7% to a 19-month trough and soybeans also dove 7% to a near-one-year bottom after a $700 billion bank rescue plan failed to soothe markets.
In Tuesday's session, U.S. crude settled up $2.25 at $90.06 a barrel after rising as much as $5.21, or 6%, intraday. London Brent crude closed up 98 cents at $84.66.
Oil traders said crude prices rose partly on talk that exporter group OPEC was considering a supply cut after prices fell below $100 a barrel.
Analysts said energy markets got a shot of optimism after Australia slashed interest rates by 100 basis points.
The cut was twice as much as expected by markets, and it sparked belief among investors that major global central banks could now choreograph a coordinated set of rate cuts.
Investors selling commodities to buy U.S. dollars also cut back on that trade when the dollar fell against the euro after a Federal Reserve decision to buy commercial paper — a move analysts said could help thaw frozen credit markets.
Among precious metals, gold, the only key commodity that escaped a drubbing Monday, extended gains as investors continued with their flight to safety.
U.S. gold for December delivery settled up $15.80, or 1.8%, at $882 an ounce.
U.S. copper for December ended up 4.15 cents at $2.5345 a pound.
