Oil falls on Ukraine peace talk hopes, China demand fears

Oil prices on Tuesday extended losses from the previous day as Ukraine and Russia headed for peace talks and on concerns about demand as China’s financial hub of Shanghai shut down to curb a surge in COVID-19 cases.

According to Reuters, Brent crude futures were down 60 cents, or 0.5%, at $111.88 a barrel at 0649 GMT, having fallen as low as $109.97.

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

Both benchmark contracts lost around 7% on Monday.

Ukraine and Russia were set to meet in Istanbul on Tuesday for their first peace talks in over two weeks. Sanctions imposed on Russia after it invaded Ukraine have curtailed oil supply and sent prices to 14-year highs earlier this month.

“Oil prices are under pressure again on expectations for peace talks between Ukraine and Russia, which could lead to an easing or avoidance of Western sanctions on Russian oil,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.