Commodity prices rose on Tuesday after gains on Wall Street prompted an uptick in risk appetite, leaving oil and metal prices well bought after Monday’s severe losses.
Concerns over the eurozone debt crisis led commodities to fall sharply on Monday. The Reuters-Jefferies CRB index, a basket of raw materials including oil, metals and cereals, fell to a seven-month low – down 2 per cent to 253.6.
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On Tuesday, however, sentiment was lifted after most equity markets across Europe and Asia turned higher, given a boost by a return to positive territory in US trade overnight, after recovering strongly from intraday losses.
Oil prices climbed from five-month troughs, helped also by a slight bounce for the euro against the dollar. But analysts warned Monday’s low of $69.27 for Nymex West Texas Intermediate could be tested again in the coming sessions as investors continued to fret about the eurozone sovereign debt crisis – its impact on demand and its influence over the euro.
“Non-commercials reduced their net long positions in the Nymex crude oil market in the week ending 11 May, during a broad liquidation across the energy complex, as concerns over Europe’s sovereign debt heightened,” said analysts at Barclays Capital.
On Tuesday, however, WTI was up $1.75 at $71.83 a barrel, while Brent crude added $1.36 to $76.46 a barrel.
The heavy losses seen on base metals markets on Monday were partially overturned on Tuesday thanks partly to a stemming of the tide of euro losses seen in recent sessions.
Meanwhile, investors also considered there was good value among metals after the severity of Monday’s losses.
“The whole complex is likely displaying better value than at any time in the recovery cycle to date,” said Alex Heath at Royal Bank of Canada.
Copper regained 2.1 per cent to $6,615 a tonne after falling 6.5 per cent on Monday, while aluminium, which fell 4.6 per cent on Monday, reclaimed 2 per cent to $2,022 a tonne. Lead regained 3.6 per cent to $1,819.50 a tonne.
