Crude prices fell more than 5% earlier this week to their lowest level in almost two weeks on hopes for progress toward an end to Russia's invasion of Ukraine. On the other hand, the existence of a related travel ban in China also casts doubt on demand.
Monday (14/3), the price of Brent crude oil for delivery in May 2022 fell by US$ 5.77 or 5.1% and closed at US$ 106.90 per barrel.
Similarly, the price of West Texas Intermediate (WTI) crude oil for delivery in April 2022 closed down US$ 6.32 or 5.8% to US$ 103.01 per barrel.
It was the lowest close for WTI since February 28 and the lowest for Brent since March 1. Both benchmark oil prices have surged since Russia's February 24 invasion of Ukraine and are up about 36% so far this year.
"Oil prices reflect a bearish sentiment drawn from expectations of positive developments in the latest round of Russia-Ukraine negotiations," said Kaushal Ramesh, analyst at Rystad Energy.
The Russian and Ukrainian delegations held a fourth round of talks on Monday. Talks took place online, but no new progress has been announced.
Ukraine said it was holding talks with Russia on a ceasefire, immediate troop withdrawal and security guarantees despite the fatal shooting of a residential building in Kyiv.
Brent and WTI have recorded the most volatile 30 days since June 2020.
On the other hand, analysts at energy consulting group EBW Analytics noted that "the new Covid-19 outbreak in China is causing new shutdowns as Omicron is spreading rapidly," which could dampen global energy demand. Considering that China is the largest importer of oil, liquefied natural gas, and coal in the world.
A province in northeastern China imposed a rare travel ban due to the Omicron outbreak.
Russia's oil and gas condensate production rose to 11.12 million barrels per day (bpd) so far in March, two sources familiar with the production data told Reuters, despite the sanctions.
The United States has banned imports of Russian oil and Britain has said it will phase out it by the end of 2022. Russia is the world's largest exporter of crude oil and oil products, shipping about 7 million barrels per day or 7% of global supply.
A senior minister said British Prime Minister Boris Johnson was trying to persuade Saudi Arabia to increase oil output, while International Energy Agency (IEA) head Fatih Birol urged oil-producing countries to pump more.
EU member states have agreed to a fourth package of sanctions against Russia, France's EU presidential office wrote on Twitter. That does not include Russian energy exports.
"Energy traders quickly abandoned crude trading after the next round of EU sanctions saved oil from Russian companies," said Edward Moya, senior market analyst at OANDA.
India indicated it could release more oil from its national stockpile.
Indian officials also said New Delhi was considering Russia's offer to buy crude oil and other commodities at discounted prices through rupee-ruble deals.
The United States needs to make a decision to finalize a deal to salvage Iran's 2015 nuclear deal with world powers, a spokesman for Iran's foreign ministry said.
Some talks are feared to fail, and 49 of the 50 Republican US senators said they would not support a new nuclear deal.
Analysts said the deal with Iran could add 1 million barrels per day of oil supplies to the market, but noted it would not be enough to offset a drop in supply from Russia.
Meanwhile, the US Federal Reserve is expected to start raising interest rates this week, which will boost the US dollar's position. This can depress oil prices by making dollar-denominated oil more expensive for foreign currency holders.
Crude stockpiles at the Cushing storage hub in Oklahoma rose last week for the first time this year, traders said, referring to a report from data provider Genscape. US government data showed stocks there fell for the ninth straight week.
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