Oil prices extended losses on Tuesday, slipping to a two-week low as ceasefire talks between Russia and Ukraine allayed fears of further supply disruptions and rising COVID-19 cases in China stoked concerns about slowing demand.
Brent futures were down $5.95, or 5.6%, to $100.95 a barrel by 0747 GMT after falling more than $6 to $100.05 earlier in the session.
US West Texas Intermediate (WTI) crude fell below $100 for the first time since March 1, falling $5.49, or 5.3%, to $97.52 a barrel. It dropped as low as $96.70 at the start of the session.
Both benchmarks were down more than 5% the day before.
Brent is down nearly $40 since hitting a 14-year high of $139.13 a barrel on March 7. US crude has fallen more than $30 since hitting its highest level since 2008 at $130.50 a barrel about a week ago.
“Expectations of positive developments in Russia-Ukraine ceasefire talks have boosted hopes of easing tightness in the global crude oil market,” said Toshitaka Tazawa, analyst at Fujitomi Securities Co Ltd.
“Renewed lockdowns to contain the COVID-19 pandemic in China have also raised concerns about slowing demand,” he said.
China on Tuesday saw a steep rise in daily COVID-19 infections, with new cases more than doubling from the previous day and hitting a two-year high, raising concerns about the rising economic cost of the country’s strict containment measures.
More talks between Ukrainian and Russian negotiators on easing the crisis were expected on Tuesday after talks ended via video on Monday without announcing new progress.
US President Joe Biden is expected to travel to Brussels next week to meet with NATO leaders to discuss Russia’s war in Ukraine, US and foreign sources familiar with the situation said on Monday.
The United States has warned China not to provide Moscow with military or financial aid. But India could accept a Russian offer to buy crude oil and other commodities at a discount, two Indian officials said, in a sign Delhi wants to keep its key trading partner on board.
“Even if there is a ceasefire, oil prices are expected to remain elevated as Western attempts to isolate Moscow through sanctions continue, which will keep the global oil market in a tight state,” said Tsuyoshi Ueno, senior economist at NLI Research Institute.
“Nevertheless, the recent drop in the oil market comes as some investors liquidated their long positions as they grew concerned about recent volatility,” NLI’s Ueno said.
Investors ditched their bullish bets on oil last week as prices soared to multi-year highs, the economic outlook deteriorated and extreme volatility made derivatives positions more expensive to maintain.
Voluntary avoidance of Russian commodities by Western buyers or self-sanctioning from April was expected to hurt exports of crude oil, liquefied natural gas (LNG) and coal, but there are already signs that flows are slowing.