Prices of crude-oil and copper futures rose sharply on Wednesday, a turnaround that some traders attributed to unconfirmed reports that a Chinese university found a treatment for the fast-spreading coronavirus.
Brent-crude futures, the global oil benchmark, jumped 3% to $55.59 a barrel, after hitting a year-low late Tuesday. Three-month copper futures climbed 2.3% on the London Metal Exchange to $5,762.50 a metric ton, rebounding from four-month lows.
Oil and copper—seen as proxies for economic growth—have been among the worst hit assets as investors reacted to the coronavirus outbreak in recent weeks. China is the world’s biggest importer of both commodities and many analysts expect a slowdown in its economy because of business disruptions resulting from widespread quarantines.
Late Tuesday, China Global Television Network, citing a report from China’s Changjiang Daily, said researchers at Zhejiang University had found two drugs that inhibit the coronavirus and its symptoms. There hasn’t been any independent scientific verification of the report.
Oil’s move was on the back of “a cheap headline about a university in China finding a drug,” said Edward Marshall, commodities trader at Global Risk Management. Mr. Marshall said the reaction to the reports suggested traders were looking for a reason to buy oil, but he remained skeptical that oil prices would rally further.
Concerns that the virus would curtail oil demand drove prices into bear-market territory on Monday. After Wednesday’s rally, Brent and WTI crude were both down more than 16% so far in 2020.
China accounts for around half of global copper demand, and the industrial metal was still down 7% year-to-date.
Commodities traders had already been looking for a bounce in oil and copper prices, partly thanks to hopes that the Chinese government would intervene to support the country’s manufacturing sector. Several banks have downgraded their GDP forecasts for China, said Robert Montefusco, a broker at Sucden Financial Research.
News that the Organization of the Petroleum Exporting Countries and its allies are debating more aggressive oil output cuts in response to the coronavirus’s impact on Chinese demand were also buoying investor sentiment, he said.
But “above and beyond those things, that news [about treatments] has certainly given us those spikes,” Mr. Montefusco added.
Investors will also be looking out for U.S. Department of Energy crude inventory data due out later Wednesday, after American Petroleum Institute inventories—figures came out Tuesday—reportedly rose by more than forecast.
Write to David Hodari at David.Hodari@dowjones.com
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