BEIJING (REUTERS) - Oil prices climbed on Wednesday (March 16), halting a retreat that saw crude giving up most of its gains following Russia’s invasion of Ukraine, as ceasefire talks stoked volatility.
Brent futures were last up US$2.64, or 2.6 per cent, at US$102.55 a barrel by 3.30pm Singapore time. US West Texas Intermediate (WTI) crude rose US$1.91, or 2 per cent, to US $98.35.
Both contracts had earlier declined more than US$1, with Brent falling to US$98.86 a barrel and WTI easing to US$94.90.
Ukrainian President Volodymyr Zelenskiy said in a video address released early on Wednesday that the positions of Ukraine and Russia at peace talks were sounding more realistic, but more time was needed.
“Traders are awaiting more clues from ceasefire talks after a two-day sell-off in the oil markets, but the crude prices may continue being under pressure as high inflation will eventually drag on economic growth and weaken demand,” said Ms Tina Teng, an analyst at CMC Markets.
A strong US dollar is a key element exerting pressure on oil prices and investors expect the US Federal Reserve to adopt a more hawkish monetary policy to curb flaring inflation, she said.
Analysts expect the Fed to raise its benchmark overnight interest rate by a quarter of a percentage point at the end of its two-day policy meeting on Wednesday to fight soaring inflation.
A rise in interest rates would strengthen the US dollar and dampen oil demand, as a stronger greenback makes it more expensive for those holding other currencies.
Oil had dived below US$100 on Tuesday, the first time since late February.
Trading sessions have been volatile since Russia’s invasion of Ukraine on Feb 24, with prices hitting 14-year highs on March 7, but Brent has since fallen nearly US$40 a barrel and WTI about US$34.
Prices had also come under pressure this week from concerns of slowing demand in China, as the world’s most populous country and second-largest oil consumer takes stringent measures against the Omicron variant of coronavirus.
However, new domestically transmitted cases in China fell by nearly half on March 15 compared with the previous day, the national health commission said on Wednesday.
Parts of China could be freed from lockdown if Omicron infections stay mild, said Stephen Innes, a managing partner at SPI Asset Management.