Oil prices fell on Tuesday, extending the previous day’s losses, as Ukraine and Russia headed for peace talks and amid concerns about demand as China’s financial hub of Shanghai shut down to stem a surge in COVID-19 cases.
Brent crude futures were down 60 cents, or 0.5 percent, to $111.88 per barrel at 0649 GMT, after falling as low as $109.97.
West Texas Intermediate (WTI) crude futures in the United States were down 59 cents, or 0.6 percent, at $105.37 after reaching a low of $103.46.
On Monday, both benchmark contracts lost around 7%.
Sanctions imposed on Russia following its invasion of Ukraine have reduced oil supply, sending prices to 14-year highs earlier this month.
Russia refers to its actions in Ukraine as a “special operation” aimed at disarming its neighbor. Oil prices are once again under pressure due to expectations for peace talks between Ukraine and Russia, which could result in the relaxation or elimination of Western sanctions on Russian oil. To offset supply concerns, Shanghai’s two-stage lockdown over nine days expect to impact fuel demand in China, the world’s largest oil importer.
According to ANZ Research, Shanghai consumes about 4% of China’s total oil consumption.
Selling pressure increased concerns that China may impose additional restrictions elsewhere to contain the pandemic.
On Thursday, the market is also anticipating a meeting of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+.
Since Russia invaded Ukraine, US oil exports have increased, and barrels of domestic oil that would typically go to the Cushing, Oklahoma, storage hub now export via the Gulf Coast.
Gold and the dollar were both lower in Asia on Tuesday morning. Rising yields have dampened hopes that talks between Russia and Ukraine to end the conflict in Ukraine will resume later this week.
Gold futures were down 0.93 percent at $1,921.70. The dollar, which usually moves in the opposite direction of gold, fell slightly on Tuesday but held firm at a three-week high reached the previous session. The benchmark 10-year US Treasury note was also near three-year highs.
China’s net gold imports through Hong Kong fell 13.7 percent to their lowest level in nearly a year in February 2022, owing to the Lunar New Year holidays and high prices. On Monday, two gold industry associations announced that they are collaborating with miners, refiners, traders, and shippers to create a database of gold bars to prevent counterfeit metal trade and allow bullion buyers to trace its origin.
Silver and palladium were both up 0.3 percent and 0.4 percent, respectively, while platinum was down 0.1 percent.
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