Title: Oil falls on Ukraine peace talk hopes, China demand fears

Mar 29, 2022 03:11AM ET

By: AnalysisWatch

Oil prices deepened their losses from the previous day on Tuesday as Ukraine and Russia moved closer to peace talks and China's financial capital Shanghai closed its gates to halt a surge in COVID-19 cases.

Brent crude futures contracts fell 60 cents, or 0.5 percent, to $111.88 a barrel at 2:49 a.m. EDT, having earlier fallen as low as $109.97.

U.S. West Texas Intermediate (WTI) crude futures fell 59 cents, or 0.6%, to $105.37 after hitting a low of $103.46.

Both benchmark contracts were down about 7% on Monday.

Ukraine and Russia were due to meet in Istanbul on Tuesday for the first peace talks in more than two weeks. Sanctions imposed on Russia after its incursion into Ukraine have curbed oil supplies and driven prices to a 14-year high earlier this month.

Russia describes its action in Ukraine as a "special operation" aimed at disarming its neighbor.

The market is also awaiting the outcome of Thursday's meeting of the Organization of Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+.

According to several sources close to the group, the group is likely to stick to plans for a modest increase in oil output in May, despite rising prices and calls from the United States and other countries for higher supply.

Global demand has risen to near pre-pandemic levels, but supply has been hampered by OPEC+'s slow resumption of supply after cuts made during the 2020 pandemic.

Traders say U.S. crude exports have increased since Russia's invasion of Ukraine, and barrels from the domestic market that would normally go to the Cushing storage hub in Oklahoma are instead being exported through the Gulf Coast.