The price of oil has fallen around 12 per cent from its prior high of $111.82 a barrel to Tuesday’s low of $98.48.
The dip in price was largely influenced by the ongoing negotiations to end the Russia-Ukraine war and increasing Covid lockdowns in China – which weakened global oil demand in March.
The trend is likely to continue through April and May.
Reuters reported that Shanghai on Wednesday extended the city’s shutdown to some western parts earlier than planned following 5,982 new local Covid cases.
Shanghai’s two week long intermittent lockdown launched on Sunday will be among the most significant in China thus far this year, due to the size of the city’s more than 25 million population.
This has the potential to lower the daily demand for oil for the duration of the restrictions.
Meanwhile, peace talks between Russia and Ukraine were “constructive” according to multiple reports, including one from Russian state news agency Tass.
Following the negotiations in Turkey on Tuesday, Russia has pledged to scale back military activity in Kyiv and northern Ukraine.
OPEC is scheduled to meet Thursday to decide on output levels from May onwards.
While oil prices rose to more than $110 per barrel in early March, OPEC remained committed to its initial production increase of 400,000 barrels a day.
For this week’s trading recommendation, oil investors can place buy or sell positions in the range of $100-$110 per barrel.