US oil climbed above $30 and Asia stocks made modest gains as investors took heart from easing coronavirus lockdowns, even as gold hit a seven-year high after the head of the US Federal Reserve warned a full economic recovery could take until 2021.
West Texas Intermediate, the US crude benchmark, rose 4.4 per cent to $30.72 a barrel on Monday morning in Asia, climbing above $30 for the first time in two months. A month ago, prices collapsed into negative territory for the first time as a lack of storage capacity forced producers to pay buyers to take product off their hands.
“Essentially the market is now telling us that storage is not an issue at the moment,” said Robert Rennie, head of global market strategy at Westpac.
Brent crude, the international benchmark, rose 3.6 per cent to $33.67 a barrel amid signs that demand was recovering as parts of Europe and North America began easing some virus-related restrictions.
But investor sentiment was tempered by comments from Fed chair Jay Powell, who on Sunday warned that the US may have to wait until a coronavirus vaccine was available for a full economic rebound, which could take until the end of 2021.
“[It] could stretch through the end of next year, we really don’t know,” he said. But he added that while net job losses would probably persist for months, a steady recovery was likely in the second half of this year barring a second wave of coronavirus cases.
Gold prices climbed in the wake of Mr Powell’s warning, with the spot price up 1.1 per cent at $1,759.01 per ounce — a new seven-and-a-half year high.
Mr Rennie said that while oil was rallying on relief over the outlook for storage, gold was gaining from both the re-escalation in US-China trade tensions and expectations — reinforced over the weekend by Mr Powell — that rates would remain low for longer as central banks extended easing measures to shore up the global economy.
Japan’s benchmark Topix index rose 0.4 per cent, while Hong Kong’s Hang Seng index dropped 0.4 per cent. China’s CSI 300 index of Shanghai- and Shenzhen-listed stocks added 0.6 per cent. South Korea’s Kospi rose 0.7 per cent.
Futures markets pointed to gains for US stocks when trading begins on Wall Street later in the day, with the S&P 500 tipped to rise 1.2 per cent. London’s FTSE 100 was expected to gain 1.6 per cent.