(New York = Yonhap News) Yeong-sook Yoon, Correspondent for Yonhap Infomax = New York oil prices fell on the news that peace negotiations between Russia and Ukraine had made progress, raising expectations for a ceasefire.
On the 29th (local time) on the New York Mercantile Exchange, the price of West Texas Intermediate (WTI) for May contract ended at $104.24 per barrel, down $1.72 (1.6%) from the previous day.
This is the lowest level since March 17, according to FactSet data.
Expectations for a ceasefire have risen significantly as the fifth peace negotiations between Russia and Ukraine have been evaluated as being constructive and the Russian military will drastically reduce military activities on the Kiiu front in Ukraine.
Ukraine, who entered the fifth round of negotiations, suggested that it could accept the neutralization that Russia had requested if its security was guaranteed, and the Russian side said, “The negotiations proceeded constructively.”
Immediately after the talks, the Russian military announced that it would drastically reduce military activities in the Ukraine capital Kiiu and northeastern Chernivu in order to “strengthen trust”.
Miher Kapadia, CEO of Sun Global Investments, told MarketWatch that oil prices fell on hopes of progress in peace negotiations between Russia and Ukraine and further fell as China implemented a second phase of lockdown.
In China, the number of new COVID-19 infections per day is approaching 7,000. As a result, the city of Shanghai implemented a circular lockdown from the 28th.
The news of China’s lockdown has raised concerns that demand for crude oil could decrease.
According to ANZ analysts, the city of Shanghai accounts for about 4% of China’s total crude oil consumption.
Although the price of oil is still above $100, it is difficult to expect further increases in production by oil-producing countries.
At the OPEC Plus (+) Oil Producer Meeting, a consultative body between the Organization of Petroleum Exporting Countries (OPEC) and non-OPEC oil producing countries, scheduled for the 31st, it is expected to maintain the existing policy of increasing crude oil production by 400,000 barrels per day in May.
Saudi Energy Minister Abdulaziz bin Salman attended an event in Dubai on the same day and insisted that OPEC+’s top goal is to stabilize the oil market and that the oil market should not be politicized.
He said OPEC+ would “keep politics out the door” when meeting.
Deutsche Bank analyst Jim Reed said today’s drop in prices reflects the lockdown in Shanghai and possible further release of US strategic oil reserves, rather than positive news from Ukraine.
According to foreign media reports, the US is currently considering the release of additional strategic oil reserves to increase oil supply.
ysyoon@yna.co.kr
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