(Bloomberg) — Oil extended losses following another volatile session after a cease-fire in Ukraine was discussed, while there were also concerns about crude demand in China due to a resurgence of Covid-19 there.

Futures in New York closed almost 6% lower Monday after briefly dipping below $100 a barrel in a session that saw prices trade in a $10 range. Ukraine’s main negotiator said they were working on a potential cease-fire with Russia before talks were paused so each side could take stock. The U.S. and China also had a “substantial discussion” in their first high-level meeting on the war.

Oil surged after Russia’s invasion of Ukraine, increasing inflationary pressure in the global economy, but has given up some gains since the middle of last week. China implemented widespread lockdowns to try and stem the latest virus flare-up, which could crimp demand in the world’s largest crude importer. The Federal Reserve, meanwhile, is expected to start tightening monetary policy this week, which is weighing on markets in general. 

The oil market was already tight before the war and the invasion has led to concerns that reduced Russian crude flows will squeeze it further. Buyers continue to shun the nation’s oil, with a cargo of its flagship Urals remaining unsold, even after traders cut the price of to a record discount.

U.K. lawmakers were told if the war continues, the nation may have to ration products like and diesel. Consumers are already feeling the pain at the pump, with prices of transport fuels rising across the globe.

remains in deep backwardation, a bullish market structure where near-dated contracts are more expensive than later-dated ones, indicating tight supply. The global benchmark was $3.23 a barrel in backwardation, compared with $1.39 at the start of last month.

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