WTI slips to near $103.00 on progress in the Russia-Ukraine peace talks and lockdown in China

• WTI has plunged 8.45% near $103.00 amid the resurgence of Covid-19 in China.
• Progress in the Russia-Ukraine peace talks has hammered oil prices.
• Moscow has allowed Ukraine to join the EU but drop NATO aspirations.

West Texas Intermediate (WTI), futures on NYMEX, has plunged around 8.45% from $113.25 on Monday amid the absence of Russia’s core initial demands in the draft documents, which are denazification, demilitarisation, and legal protection for the Russian language in Ukraine. Adding to that, Moscow has allowed Ukraine to join European Union (EU) but has to drop NATO aspirations. This has brought a sense of optimism about the progress of peace talks between the Kremlin and Kyiv and pessimism in oil prices.

Apart from that, lockdown measures in a large part of Shanghai city in Ukraine have diminished demand concerns. The Chinese administration went on a lockdown of nine days in Shanghai to undertake mass coronavirus testing. The renewed fears of Covid-19 in China have put restrictions on the movement of men, machines, and materials, which has raised questions over the demand for oil going forward.

Meanwhile, the energy minister of the UAE Suhail Mohamed Al-Mazrouei also underpins the oil bears, citing that OPEC+ might be tempted to fix the current shortage in oil stockpiles by raising production beyond its average monthly increments of 400,000 barrels per day (BPD).

The presence of a majority of the catalysts has brought an intensified sell-off in the oil prices. Going forward, the headlines from the Russia-Ukraine peace talks will remain a major driver. However, investors will also focus on fresh impetus from the Iran nuclear deal, which may bring more pressure on the oil prices.