Oil drops worry about demand in China, hope for peace talks in Ukraine

Storage tanks at Marathon Petroleum's Los Angeles Refinery in Carson, California, USA
FILE PHOTO: Storage tanks are seen at Marathon Petroleum’s Los Angeles refinery, which processes domestic and imported crude oil, gasoline, diesel fuel and other petroleum products in Carson, California, USA, 11th 2022. Image captured by a drone. REUTERS/Bing Guan

March 29, 2022

MELBOURNE (Reuters) – U.S. crude futures slid in early trade on Tuesday, extending losses from the previous session on the prospect of a sharp drop in fuel demand as Shanghai shut down to stem a surge in COVID cases and as Ukraine and Russia headed towards peace talks.

US West Texas Intermediate (WTI) crude oil futures hit a low of $103.46 a barrel shortly after the open and fell $2.09, or 2%, to $103.87 by 2236 GMT, after falling around 7% had fallen.

Brent crude futures were poised to open about $3 lower, even after falling about 7% in the previous session.

Ukraine and Russia were scheduled to meet in Istanbul on Tuesday for their first peace talks in over two weeks. Sanctions imposed on Russia after invading Ukraine have cut oil supplies and pushed prices to 14-year highs earlier this month.

Russia calls its actions in Ukraine a “special operation” to disarm its neighbor.

Shanghai’s two-stage, nine-day lockdown is expected to ease concerns about tight supply and will hurt fuel demand in China, the world’s largest oil importer. The country’s financial hub accounts for about 4% of China’s oil consumption, according to analysts at ANZ Research.

Traffic data from Baidu showed the city’s morning peak traffic had dropped by 45% as workers stayed home, ANZ analysts said in a note.

(Reporting by Sonali Paul in Melbourne; Editing by Chris Reese) Oil drops worry about demand in China, hope for peace talks in Ukraine


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