U.S. crude futures fell on Tuesday, extending losses from the previous day as Ukraine and Russia headed for peace talks and fears of a drop in fuel demand in China after the financial hub of Shanghai shut down to curb a surge in COVID 19 cases.
Brent crude futures were trading down $1.07, or 1.0%, at $111.41 a barrel at 0107 GMT, having dipped as low as $109.97.
The U.S. West Texas Intermediate WTI crude futures hit a low of $103.46 in early trade and were down 79 cents, or 0.8%, at $105.17. Both benchmark contracts lost 7% on Monday.
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.
Oil prices are under pressure again due to expectations for a peace talk between Ukraine and Russia, which could lead to an easing of sanctions or avoidance of Russian oil by the West, said Hiroyuki Kikukawa, general manager of research at Nissan Securities.
He said that a successful ceasefire could raise the possibility of reviving an Iranian nuclear deal.
It is expected that the two-stage lockdown over nine days in Shanghai will affect fuel demand in China, the world's largest oil importer, due to concerns about tight supply. ANZ Research analysts said the country's financial hub accounts for about 4% of China's oil consumption.
The market is waiting for a meeting by the Organization of the Petroleum Exporting Countries OPEC and allies on Thursday, and will likely stick to plans for a modest increase in oil output in May, according to several sources close to the group, despite the Ukraine crisis and calls from the United States and other consumers for more supply.
Demand has gone up to pre-pandemic levels, but supply has been hindered, asOPEC has been slow to restore supply cuts enacted during the Pandemic in 2020.