Oil Tumbles to 2-Week Low on Ukraine Talks, Fears over China Demand

Men cook a meal in a street in Mariupol, Ukraine, Sunday, March 13, 2022. (AP)
Men cook a meal in a street in Mariupol, Ukraine, Sunday, March 13, 2022. (AP)
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Oil Tumbles to 2-Week Low on Ukraine Talks, Fears over China Demand

Men cook a meal in a street in Mariupol, Ukraine, Sunday, March 13, 2022. (AP)
Men cook a meal in a street in Mariupol, Ukraine, Sunday, March 13, 2022. (AP)

Oil prices extended losses on Tuesday, sliding to a two-week low as ceasefire talks between Russia and Ukraine eased fears of further supply disruptions and surging COVID-19 cases in China fueled concerns about slower demand.

Brent futures dropped $5.95 or 5.6% to $100.95 a barrel by 0747 GMT after tumbling by more than $6 to $100.05 earlier in the session.

US West Texas Intermediate (WTI) crude fell below $100 level for the first time since March 1, dropping $5.49 or 5.3% to $97.52 a barrel. It fell to as low as $96.70 earlier in the session.

Both benchmarks declined by more than 5% the previous day.

Brent has lost nearly $40 since hitting a 14-year high of $139.13 a barrel on March 7. US crude has fallen more than $30 since touching its highest since 2008 of $130.50 a barrel about a week ago.

"Expectations of positive developments in the Russia-Ukraine ceasefire talks bolstered hopes to ease tightness in the global crude market," said Toshitaka Tazawa, an analyst at Fujitomi Securities Co Ltd.

"Fresh lockdowns to curb the COVID-19 pandemic in China also raised concerns over slower demand," he said.

China posted a steep jump in daily COVID-19 infections on Tuesday, with new cases more than doubling from a day earlier to hit a two-year high, raising concerns about the rising economic costs of the country's tough containment measures.

Further talks between Ukrainian and Russian negotiators to ease the crisis were expected on Tuesday after discussions on Monday via video ended with no new progress announced.

US President Joe Biden is expected to travel to Brussels next week to meet with NATO leaders to discuss Russia's war in Ukraine, US and foreign sources familiar with the situation said on Monday.

The United States has warned China against providing military or financial help to Moscow. But India may take up a Russian offer to buy crude oil and other commodities at a discount, two Indian officials said, in a sign that Delhi wants to keep its key trading partner on board.

"Even if there is a ceasefire, oil prices are expected to remain at high levels as Western attempts to isolate Moscow through sanctions will continue, keeping the global oil market in a tight condition," said Tsuyoshi Ueno, senior economist at NLI Research Institute.

"Still, the recent fall in the oil market comes as some investors unwound their long positions as they became increasingly worried about recent volatility," NLI's Ueno said.

Investors cut bullish bets on oil last week as prices surged to multi-year highs, the economic outlook deteriorated, and extreme volatility made derivatives positions more expensive to maintain.

The voluntary shunning of Russian commodities by Western buyers, or self-sanctioning, was expected to start hitting exports of crude oil, liquefied natural gas (LNG) and coal from April, but there are already signs that flows are weakening.



US Job Growth Surges in September, Unemployment Rate Falls to 4.1%

A woman enters a store next to a sign advertising job openings at Times Square in New York City, New York, US, August 6, 2021. REUTERS/Eduardo Munoz/File Photo
A woman enters a store next to a sign advertising job openings at Times Square in New York City, New York, US, August 6, 2021. REUTERS/Eduardo Munoz/File Photo
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US Job Growth Surges in September, Unemployment Rate Falls to 4.1%

A woman enters a store next to a sign advertising job openings at Times Square in New York City, New York, US, August 6, 2021. REUTERS/Eduardo Munoz/File Photo
A woman enters a store next to a sign advertising job openings at Times Square in New York City, New York, US, August 6, 2021. REUTERS/Eduardo Munoz/File Photo

US job growth accelerated in September and the unemployment slipped to 4.1%, further reducing the need for the Federal Reserve to maintain large interest rate cuts at its remaining two meetings this year.
Nonfarm payrolls increased by 254,000 jobs last month after rising by an upwardly revised 159,000 in August, the Labor Department's Bureau of Labor Statistics said in its closely watched employment report on Friday.
Economists polled by Reuters had forecast payrolls rising by 140,000 positions after advancing by a previously reported 142,000 in August.
The initial payrolls count for August has typically been revised higher over the past decade. Estimates for September's job gains ranged from 70,000 to 220,000.
The US labor market slowdown is being driven by tepid hiring against the backdrop of increased labor supply stemming mostly from a rise in immigration. Layoffs have remained low, which is underpinning the economy through solid consumer spending.
Average hourly earnings rose 0.4% after gaining 0.5% in August. Wages increased 4% year-on-year after climbing 3.9% in August.
The US unemployment rate dropped from 4.2% in August. It has jumped from 3.4% in April 2023, in part boosted by the 16-24 age cohort and rise in temporary layoffs during the annual automobile plant shutdowns in July.
The US Federal Reserve's policy setting committee kicked off its policy easing cycle with an unusually large half-percentage-point rate cut last month and Fed Chair Jerome Powell emphasized growing concerns over the health of the labor market.
While the labor market has taken a step back, annual benchmark revisions to national accounts data last week showed the economy in a much better shape than previously estimated, with upgrades to growth, income, savings and corporate profits.
This improved economic backdrop was acknowledged by Powell this week when he pushed back against investors' expectations for another half-percentage-point rate cut in November, saying “this is not a committee that feels like it is in a hurry to cut rates quickly.”
The Fed hiked rates by 525 basis points in 2022 and 2023, and delivered its first rate cut since 2020 last month. Its policy rate is currently set in the 4.75%-5.00% band.
Early on Friday, financial markets saw a roughly 71.5% chance of a quarter-point rate reduction in November, CME's FedWatch tool showed. The odds of a 50 basis points cut were around 28.5%.