Oil prices consolidated around the $100 level yesterday but gold, base metals and agricultural commodities staged a recovery after last week's sell-off. With the end of the first quarter nearing, dealers warned that further volatility was likely if hedge funds continued to close leveraged positions across various asset classes. Last week's sell-off has prompted intense debate about the outlook for commodities.

"The investment theses surrounding commodities look poised to be tested very meaningfully," said Tobias Levkovich, chief US equity strategist at Citigroup: "The investment community might be in the process of recognising some disquieting factors about commodities focused portfolios that may have been overlooked as momentum-driven strategies have dominated."