Oil plunge drags copper with it in commodities markets 'bloodbath'

Copper regained some of the losses registered in early play Monday, but remained under the cosh, as the market digested the price plunge in oil and possibly scenarios going ahead.

Copper was trading on the London Metal Exchange's electronic platform LMEselect down around $82.5 at $5,548/mt as of 1710 GMT, up from an intraday low of $,5433/mt earlier in the session.

Global equities markets were battered throughout the day, with London's FTSE100 closing down almost 8% and the Dow Jones Industrial Average in the US down around 7% at 1710 GMT.

"It's a bloodbath, the sky is falling on our heads," exclaimed one trader.

In a research note Monday Canada's TD Securities' Bart Melek, head of commodity strategy, said, "turmoil in global markets has caught up to the base metal complex once again ... With growth uncertainty and commodity demand firmly in question, money managers have opted to rush for the sidelines, lowering liquidity, seeing vols bid, and algorithms as the marginal trader."

However, not everyone was in the mire.

"A lot of people will be cleaning up, those that are short oil. It's a massive payday," said a broker.

Gold had temporarily broken above $1,700/oz during intraday trade Monday, only to also get caught up in the flight to cover losing positions.

Bullion was spot bid around $1,670/oz at 1710 GMT.

"Positioning is becoming stickier at higher levels as further rate cuts globally offer fundamental backing, suggesting the precious metals rally is here to stay," added TD's Melek.

The stimulus for the market-wide selloff, at a time when sentiment has been battered by the coronavirus fallout, was news over the weekend that Saudi Arabia is aggressively cutting the price of its oil.

Saudi Arabia announced deep cuts for customers globally after falling out with Russia regarding further production cuts to support already struggling prices. The price cuts were deepest for Europe -- a move that's widely seen as a direct challenge to Russia -- one of the region's biggest oil supplier.

ING said it now forecasts ICE Brent crude to average $33/barrel during the second quarter of 2020.

"Meanwhile uncertainty over the demand picture, as the COVID-19 virus spreads, only adds further downside risk," the Dutch bank added.

Arab Light, a popular Saudi grade among refiners, is now priced at $3.10/b below benchmark Oman/Dubai prices, the lowest since at least since 1989 when Platts began keeping records.

"This will be remembered as Black Monday. If you thought it couldn't get any worse than the last fortnight, think again. The blood really is running in the streets, it's utter carnage out there," Markets.com analyst Neil Wilson said.