NEW YORK (MarketWatch) -- Crude-oil futures bounced back Tuesday, up more than 3% after having closed at an eight-month low in the previous session.
Crude for November delivery rose $3.09 to $90.92 a barrel in electronic trading on Globex.
Analysts at Sucden Research cited "technical buying and growing optimism global central banks may cut rates to ease fears, after the Reserve Bank of Australia slashed interest rates."
"We seem to be drifting in and out of panic mode," said Edward Meir, an analyst at MF Global, in a research note. He's not bullish on crude making a stand at current levels.
Australia's central bank implemented a larger-than-expected interest-rate of a full percentage point amid a worsening financial-markets crisis worldwide. See Asia Markets.
The Reserve Bank of Australia cut its benchmark policy interest rate by a full percentage point, ponting to disarray in global financial markets and mounting evidence of a sudden deceleration in economic growth among major trading partners in Asia.
The move helped some other stocks in Asia also rebound or pare losses, by fanning expectations that other central banks -- including the European Central Bank and the Federal Reserve -- could participate in coordinated efforts to get the frozen global credit markets moving by slashing their own policy rates. See full story.
The Japanese yen and the U.S. dollar retreated in foreign-exchange trading, giving back some of the previous day's gains, after the surprise rate cut by Australia. Dollar weakness typically boosts dollar-denominated commodities such as oil and gold. See Currencies.
On Monday, crude closed at $87.81 a barrel on the New York Mercantile Exchange, down 6.5% and near the session's low. Prices haven't seen levels this low since Feb. 7.
"Buyers are sitting on their hands, while sellers are liquidating positions and fleeing toward the safety of cash," Meir said. "However, despite the recent declines amid very abnormal market conditions, we think that some commodity markets -- like crude -- are still overextended, and have more room to fall."
Also on the Globex Tuesday, November reformulated gasoline rose 4 cents to $2.10 a gallon and November heating oil gained 5 cents to $2.53 a gallon.
Natural gas for November delivery gained 6 cents to $6.90 per million British thermal units.