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

TOKYO — Oil prices slid to a two-week low on Tuesday on continued ceasefire talks between Russia and Ukraine and concerns about demand in China after a surge in COVID-19 cases.

Brent futures dropped $4.20 or 3.9% to $102.70 a barrel by 0125 GMT after falling 5.1% the previous day.

U.S. West Texas Intermediate (WTI) crude fell below $100 level for the first time since March 1, dropping $4.30 or 4.2% to $98.71 a barrel. That followed a 5.8% tumble the previous day.

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

“Fresh lockdowns to curb the COVID-19 pandemic in China also raised concerns over slower demand,” he added.

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

Ukraine’s President Volodymyr Zelenskiy said late on Monday that negotiations with Russia, the world’s second largest crude exporter, will continue on Tuesday.

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

The United States warned China after “intense” talks on Monday against helping Moscow in its invasion of Ukraine.

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

British Prime Minister Boris Johnson is trying to persuade Saudi Arabia to increase its oil output, a senior minister said on Monday, following reports that Johnson would travel to the OPEC heavyweight this week. (Reporting by Yuka Obayashi; Editing by Shivani Singh)