Stocks and oil prices have steadied and even bounced back after a “Black Monday” that saw them fall dramatically. Coronavirus and the collapse of the OPEC+ alliance had been blamed for the slump.

Oil rebound

Oil prices saw a massive 30% drop on Monday, which is being referred to as “Black Monday” because of the enormous losses that the world stock markets faced that day. With the Dow Jones Index losing over 2,000 points, an emergency break in early trade was called to control panic selling.

However, oil prices jumped over 6% to come back from its previously precarious position on Tuesday. Crude was supported by hopes for a settlement and potential U.S. output cuts, but gains could be short-lived as oil demand continues to be hit by the economic impact of the coronavirus outbreak. Brent crude futures rose $2.52, or 7.33%, to $36.88 a barrel by 07.00 GMT, while U.S. West Texas Intermediate (WTI) crude gained $2.18, or 7%, to $33.31 a barrel.

Both benchmarks plunged 25% on Monday, dropping to their lowest since February 2016 and recording their biggest one-day percentage declines since Jan. 17, 1991, when oil prices fell at the outset of the U.S. Gulf War.

Saudi Arabia plans to boost its crude output above 10 million barrels per day (bpd) in April from 9.7 million bpd in recent months, two sources told Reuters on Sunday. The kingdom slashed its export prices at the weekend to encourage refiners to buy more. Russia, one of the world’s top producers alongside Saudi Arabia and the United States, also said it could lift output and that it could cope with low oil prices for six to 10 years.

U.S. shale producers rushed to deepen spending cuts and could reduce production after OPEC’s decision to pump full bore into a global market hit by shrinking demand due to the coronavirus outbreak.

On the demand side, the International Energy Agency said oil demand was set to contract in 2020 for the first time since 2009. The agency cut its annual forecast and said that demand would contract by 90,000 bpd in 2020 from 2019.

Stock Markets

Japan’s Nikkei index opened three percent lower early Tuesday but made some gains in the early hours to settle closer to 1.5% lower. After falling 6.5%, the South Korean markets stabilized on Tuesday and were down 0.4%. Similarly, Australia’s ASX started the day being 4% lower but had pared its losses to under one percent as the day progressed.

Amid panic in the markets over COVID-19, US President Donald Trump announced Monday that he would ask Congress to put together measures like payroll tax relief to calm fears after the dollar incurred huge losses against the euro, the yen and the Swiss franc.