Oil Recoups Back To Over $100, After Falling Below That Mark In Previous Session

Oil prices recouped to gain over 1% to around $101 per barrel early on Wednesday after having fallen below $100 in the previous session for the first time this month, but the pull and push in financial markets is expected to continue ahead of the US Federal Reserve's policy outcome later in the day.

The global benchmark Brent crude oil price was last over 1 per cent higher to trade around $101, as quoted by Reuters, while the US crude rose but still held below the $100 per barrel mark.

Brent crude oil prices closed at $99.11 per barrel on Tuesday, ending below $100 since the second day of the Russian invasion of Ukraine on February 25. It fell as low as $97.44 per barrel in the previous session, tracking the second day of losses.

The backdrop suggests more volatility is in store.

Traders tracking the Ukraine-Russia peace talks fall in energy demand from China as it has imposed strict mobility restrictions to control fast-spreading coronavirus. The US Federal Reserve is expected to raise rates for the first time in three years and give guidance on future tightening.

ING's analysts noted that market moves in Asia would be "cautious" ahead of the Fed meeting later in the day.

The US central bank is predicted to raise interest rates by at least 25 basis points, and traders will also closely watch for cues on the future path of the policy.

Meanwhile, Ukrainian President Volodymyr Zelensky said that peace talks sounded more realistic. Still, more time was needed, even as Russian airstrikes continued and the refugee tally from Moscow's invasion reached 3 million.

"On Tuesday, crude oil settled on a weaker note in the international markets. Crude oil extended its fall amid China's covid lockdowns and easing supply fears. The rapid spread of new variants and ineffectiveness of the COVID-19 vaccine on new variants prompt Chinese authority to impose lockdown. China has also cancelled thousands of flights to control the spread of the virus. Crude oil showed an unexpected reaction after China locked down its two megacities," Rahul Kalantri, Vice President for Commodities at Mehta Equities.

"Crude oil also plunged amid possible US-Iran deal and also the possibility of returning Venezuela's oil into global markets. The US shell oil productions are also rising and cap crude oil prices. However, the Russia-Ukraine crisis could support oil prices at lower levels," he added.

Chinese health authorities reported a slight drop in new cases compared to a day earlier, although major Chinese cities continue to grapple with controlling the spread of the virus.