Crude oil futures slide amid demand concerns; eyes on Russia-Ukraine talks

Crude oil futures slipped in midafternoon Asian trade March 29 as investors continued to fret over China's COVID-19 lockdowns that could ravage the country's energy demand.

At 3:33 pm Singapore time (0733 GMT), the ICE May Brent futures contract dipped 14 cents/b (0.12%) from the previous close at $112.34/b while the NYMEX May light sweet crude contract edged down 30 cents/b (0.28%) at $105.66/b.

"In light of China's lockdown and depleting demand by largest importer, both Brent and WTI saw a sharp decline of over 7% on Monday, and extending losses from yesterday," said Avtar Sandu, senior manager commodities at Phillip Futures.

OANDA's Senior Market Analyst Jeffrey Halley echoed a similar sentiment, adding, "Oil's volatility continues to make eye-watering viewing, but increasingly, the moves are being driven by falling liquidity in the futures markets, and the exchanges' itchy trigger fingers on raising margins."

Shanghai's Pudong financial district entered its second day of lockdown. Residents are ordered to work from home, and public transit and ride-hailing services have also been suspended.

Meanwhile, investors perked up on news of possible progress on the Russia-Ukraine conflict. Delegates from both countries would be meeting in Turkey for the first face-to-face talks in more than two weeks.

"Markets are always keen to price in the prospect of a peace deal, if one could call it that, with what might be hints of concessions by both sides," Halley said.

"Comments out from both sides though late in the day, suggest an agreement will be as elusive as ever," he added.

Market participants will also be closely watching the scheduled meeting between OPEC and its allies March 31 to decide on May production levels.

Analysts have said that supplies would be "restored with ease" despite the ongoing Russia-Ukraine conflict, and unlikely to be boosted sharply to meet increased demand.