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BEIJING: On Tuesday, oil prices fell to a two-week low following continued ceasefire talks between Russia and Ukraine and concerns about demand in China following an upswing in COVID-19 cases.

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

For the first time since Mar. 1, West Texas Intermediate crude fell below $100, declining $4.30 or 4.2 percent to $98.71 a barrel. The previous day, the price dropped 5.8 percent.

According to analyst Toshitaka Tazawa at Fujitomi Securities, “expectations of positive developments in the Russia-Ukraine ceasefire talks bolstered hopes to ease tightness in the global crude market.”

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

Chinese oil processing rates also slipped 1.1 percent in the first two months of 2022 compared with a year ago, as refiners reduced production after Beijing lowered crude oil import quotas.

The National Bureau of Statistics data 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 dropped 1.1 percent in the first two months of 2022 from a year ago, to the lowest since December 2020.

The drop occurs as independent refiners scaled back operations after Beijing slashed their crude oil import quotas.

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

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

China cut its first batch of 2022 import quotas to independent refiners by 11 percent from 2021’s first allotment, as Beijing aims to consolidate its refining sector by removing excessive and inefficient processing capacity.

Independent refineries, known as ‘teapots’, in the eastern province of Shandong were also ordered by local government to reduce operations during the Beijing 2022 Winter Olympics, which ran from Feb. 4 to Feb. 20.

Teapots’ refining run rates are expected to stay low in coming weeks as a surge in oil prices triggered by Russia’s invasion of Ukraine squeezes margins, with a jump beyond $130 a barrel, unnerves fuel producers.

Analysts from China-based energy consultancy JLC estimated refining margins may have plunged to a break-even level. The teapots’ average crude processing rate was 57.62 percent by March 8, down 2.53 percentage points from a week ago, they said.