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BEIJING: Oil prices fell to their lowest level in two weeks on Tuesday following continued ceasefire talks between Russia and Ukraine and concerns over demand in China following a increase in COVID-19 cases.

After falling 5.1% the day before, Brent futures fell $4.20 or 3.9% to $102.70 at 0125 GMT.

For the first time since March 1, West Texas Intermediate crude fell below $100, down $4.30 or 4.2% to $98.71 a barrel. The day before, the price had fallen by 5.8%.

According to analyst Toshitaka Tazawa of Fujitomi Securities, “expectations of positive developments in ceasefire talks between Russia and Ukraine have bolstered hopes of easing tensions in the global crude market.”

“New lockdowns to curb the COVID-19 pandemic in China have also raised concerns about slowing demand,” he added.

Chinese oil processing rates also fell 1.1% in the first two months of 2022 from a year ago as refiners cut output after Beijing lowered oil import quotas. raw.

Data from the National Bureau of Statistics showed on Tuesday that throughput in January-February reached 113.01 million tonnes or 13.98 million barrels per day.

China’s Oil Refining Falls

China’s daily oil processing rate fell 1.1% in the first two months of 2022 from a year ago, the lowest since December 2020.

The decline comes as independent refiners scaled back operations after Beijing cut their crude oil import quotas.

Throughput in the January-February period reached 113.01 million tonnes, data from the National Bureau of Statistics showed on Tuesday, equivalent to 13.98 million barrels per day.

The bureau combines January and February data due to the Lunar New Year holiday, which fell in early February this year.

China has cut its first batch of import quotas for 2022 to independent refiners by 11% from the first allocation of 2021, as Beijing aims to shore up its refining sector by cutting out excess and inefficient processing capacity.

Independent refineries, known as “teapots”, in the eastern province of Shandong have also been ordered by the local government to curtail operations during the Beijing 2022 Winter Olympics, which took place from 4 to February 20.

Teapot refining rates are expected to remain low in the coming weeks as a spike in oil prices triggered by Russia’s invasion of Ukraine squeezes margins, with a jump past $130 a barrel, irritates fuel producers.

Analysts at China-based energy consultancy JLC said refining margins may have dipped to a break-even level. The average teapot crude processing rate was 57.62% as of March 8, down 2.53 percentage points from a week ago, they said.

Ashley C. Reynolds