Oil prices tumbled on doubts that Saudi Arabia and Russia could quickly reach a deal to reduce global crude supplies, while Asia stocks were buoyed by optimism that measures to contain the coronavirus pandemic were bearing fruit.
In early trading in Asia on Monday, Brent crude, the international oil benchmark, fell 4.3 per cent to $32.66 per barrel while US marker West Texas Intermediate sank 6.5 per cent to $26.51.
Both benchmarks had earlier fallen as much as 12 per cent after Riyadh and Moscow traded barbs over the weekend, raising concerns over any potential agreement to cut supply and put a floor under prices that have been hit by a falling-out between the two producers.
It is “clear that tensions between the Saudis and Russians are still high, and both are playing a blame game over who was behind the failure of the Opec+ meeting in early March,” said Warren Patterson, head of commodities strategy at ING.
Stocks across Asia Pacific rose after European governments signalled they were considering an easing of lockdowns imposed across much of the continent.
Japan’s benchmark Topix index added 1.4 per cent, South Korea’s Kospi climbed 1.7 per cent and Australia’s S&P/ASX 200 gained 2.3 per cent. Hong Kong’s Hang Seng was up 0.7 per cent.
S&P 500 futures tipped the Wall Street benchmark to rise 2.6 per cent when US trading begins later on Monday. On Sunday Vice President Mike Pence said the US was seeing “glimmers of progress” in terms of the outbreak, even as the US surgeon general warned that the coming weeks would prove “our Pearl Harbor”.
“Everyone is looking at US stock futures,” said Mansoor Mohi-uddin, a senior macro strategist at NatWest Markets. “If [futures] are rising in the place where the outbreak is at its worst now that’s seen as a good thing.”
The pound slipped 0.4 per cent to $1.223 after UK Prime Minister Boris Johnson was admitted to hospital on Sunday for precautionary tests, still suffering from coronavirus symptoms after developing signs of infection 10 days ago.
Mr Johnson has continued to run the government despite appearing to be unwell in some of his video messages.
Mr Mohi-uddin said Mr Johnson’s hospitalisation was “making investors concerned that in the UK there may be a vacuum of leadership at a very critical time”.