Crude oil prices drop 2% in early trade as China shuts down

Crude oil prices drop 2% in early trade as China shuts down

MELBOURNE Reuters -- U.S. crude futures fell in early trade on Tuesday, extending losses from the previous session on the possibility of a drop in fuel demand as Shanghai shut down to curb a surge in COVID cases and as Ukraine and Russia go for peace talks.

U.S. West Texas Intermediate WTI crude futures were at a low of $103.46 a barrel shortly after opening and were down $2.09, or 2%, at $103.87 at 2236 GMT, after dropping about 7% on Monday.

The price of crude oil was poised to open around $3 lower, after sliding around 7% in the previous session.

Ukraine and Russia were due 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.

Russia calls its actions in Ukraine a special operation to disarm its neighbour.

Fuel demand in China, the world's largest oil importer, is expected to be affected by the two-stage lockdown over nine days, due to concerns about tight supply. ANZ Research analysts said that the country's financial hub accounts for about 4% of China's oil consumption.

Traffic data from Baidu showed peak morning traffic in the city was down 45% as workers stayed at home, according to ANZ analysts.