Author: Mr. Amar – Technical Analyst

West Texas Intermediate (WTI) is down around 8.45% from $113.00 on Monday as Russia’s initial key demands in the preliminary documents, namely denazification, demilitarization and demilitarization, legal protection of the Russian language in Ukraine, were not met. In addition, Moscow has allowed Ukraine to join the European Union (EU) but must abandon NATO ambitions. This has sparked optimism about the progress of the Kremlin-Kyiv peace talks and pessimism about oil prices. Aside from that, lockdown measures in a large part of the city of Shanghai in Ukraine have eased concerns about demand. The Chinese government closed for nine days in Shanghai for mass coronavirus testing. Renewed fears of Covid19 in China have restricted the movement of people, machinery, and materials and raised questions about future oil demand.

Ukraine and Russia were scheduled to meet in Istanbul on Tuesday for their first peace talks in more than two weeks. Sanctions imposed on Russia after invading Ukraine depleted oil stocks, sending prices to 14-year highs earlier this month. To counter concerns about supply shortages, the two-stage shutdown of Shanghai for nine days is expected to hurt fuel demand in China, the world’s largest oil importer. The country’s financial center accounts for about 4% of China’s oil consumption. The market is also waiting on a planned meeting on Thursday by the Organization of the Petroleum Exporting Countries (OPEC). The group is likely to stick to plans for a modest increase in oil production in May, multiple sources close to the group said, despite a price hike due to the Ukraine crisis and orders from the United States and other consumers for more supply.