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Oil falls on talks in Ukraine, fears of slower demand in China

The image shows a model of 3D printed oil drums in front of a displayed stock chart
A model of 3D printed oil drums can be seen in front of the displayed stock chart going down in this image dated December 1, 2021. REUTERS/Dado Ruvic/Illustration

March 15, 2022

By Yuka Obayashi

TOKYO (Reuters) – Oil prices slipped to a two-week low on Tuesday amid continued Russia-Ukraine ceasefire talks and concerns over demand in China following a surge in COVID-19 cases.

Brent futures were down $4.20, or 3.9%, at $102.70 a barrel by 0125 GMT after falling 5.1% the previous day.

US West Texas Intermediate (WTI) crude fell below $100 for the first time since March 1, falling $4.30, or 4.2%, to $98.71 a barrel. This was followed by a 5.8% plunge the day before.

“Expectations of positive developments in Russia-Ukraine ceasefire talks fueled hopes of easing tightness in the global crude oil market,” said Toshitaka Tazawa, an analyst at Fujitomi Securities Co Ltd.

“Renewed lockdowns to contain the COVID-19 pandemic in China have also raised concerns about slower demand,” he added.

Mainland China saw a steep rise in daily COVID-19 infections on Tuesday, with new symptomatic cases more than doubling to a two-year high from a day earlier as a virus outbreak spread rapidly in the country’s northeast.

Ukrainian President Volodymyr Zelenskyy said late Monday that negotiations with Russia, the world’s second largest crude oil exporter, will resume on Tuesday.

Zelenskyi also said he spoke to Israeli Prime Minister Naftali Bennett as part of negotiations to end the war with Russia “with a fair peace.”

The US warned China not to help Moscow in its invasion of Ukraine after “intense” talks on Monday.

International Energy Agency (IEA) chief Fatih Birol on Monday urged oil-producing countries to pump more to stabilize markets hit by the war in Ukraine.

British Prime Minister Boris Johnson is trying to persuade Saudi Arabia to increase its oil production, a senior minister said Monday after reports said Johnson was due to travel to the OPEC heavyweight this week.

(Reporting by Yuka Obayashi; Editing by Shivani Singh)

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DUSTIN JONES

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