COMMODITIES-Oil drops to 4-year low, China metals tumble on recession fears

By Naveen Thukral

SINGAPORE, April 7 (Reuters) - Oil slid around 4% on Monday to its weakest since 2021, while most commodity markets including metals tumbled as an intensifying trade war between the United States and China triggered worries over demand for raw materials.

Gold, which climbed to a record peak last week, also fell amid a wider markets sell-off.

Major stock indexes plunged as U.S. President Donald Trump showed no sign of backing away from his sweeping tariff plans, and investors bet the mounting risk of recession could see the Federal Reserve cutting interest rates as early as May.

"The biggest threat to the global goods trading system since World War II is forcing a rapid deleveraging in risk assets and escalation in recession risks," ANZ said in a note.

"Gold's allure as a haven asset failed to protect it from the selloff across global markets."

Responding to U.S. President Donald Trump's tariffs, China on Friday said it would impose additional levies of 34% on American goods, confirming investor fears that a full-blown global trade war is under way and that the global economy may be at risk of a recession.

Brent futures LCOc1 and U.S. West Texas Intermediate crude futures CLc1 hit their lowest since April 2021. Over the past week, both benchmarks have lost more than 10%.

"Oil prices have fallen more sharply than equities since Trump unveiled tariff details in the middle of last week, with the decline exacerbated by OPEC+ plans of increased output," said Satoru Yoshida, a commodity analyst with Rakuten Securities.

"A wave of retaliatory tariffs globally could deliver a significant blow to the world economy, making a near-term recovery in the oil market difficult to envision."

BASE METALS & AGRICULTURAL PRODUCTS

Base metal prices in China dropped, with copper on the Shanghai Futures Exchange falling 6%, marking its lowest in more than three months.

However, three-month copper CMCU3 on the London Metal Exchange along with most other metals, reversed its downtrend after China market opened, driven by arbitrage trading.

Gold prices pared earlier losses as some safe-haven demand filtered through and as strong central bank buying supported prices after they dropped to a more than three-week low, while analysts retained a upbeat outlook for bullion.

Chicago soybean futures were supported by potential changes to U.S. biofuel policy and a weak dollar.

Japanese rubber futures logged their steepest daily drop in over four years and Malaysian palm oil futures fell for a third consecutive session.