Crude oil prices closed lower for a second day on Tuesday (March 29) following reports of progress in peace talks between Russia and Ukraine. Prices were also pressured by concerns about weaker demand from China, which is sealing off Shanghai to contain the spread of COVID-19.
- WTI crude futures were down $1.72, or 1.6%, at $104.24 a barrel.
- BRENT crude futures fell $2.25, or 2%, at $110.23 a barrel.
Turkish Foreign Minister Mevlut Cavusoglu said peace talks between Russia and Ukraine in Istanbul yesterday made the most progress since negotiations began.
Cavusoglu also said that the Russian and Ukrainian ministers will discuss more complex issues at the next opportunity before the final meeting between Russian President Vladimir Putin and Ukrainian President Volodymyr Zelensky.
Oil prices fell after it was announced that China is putting its financial center, Shanghai, under lockdown following a rapid increase in COVID spread in the city. This could impact oil demand from China, the world’s largest crude oil importer.
Zhen Michael Song, a professor at the Chinese University of Hong Kong (CUHK), predicted that China’s urban lockdown will cause at least $46 billion/month in damage to the Chinese economy, equivalent to 3.1% of gross domestic product (GDP).
Mr. Zhen also said that the Shanghai lockdown alone could lead to a 4% decline in China’s real GDP.
Investors are paying attention to the EIA’s weekly oil inventory report today
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Wednesday, March 30, 2022