On Tuesday, U.S. oil futures fell further, extending losses from the previous day, as Ukraine and Russia prepared for peace talks and on fears of a decline in fuel demand in China following the financial hub of Shanghai's closure to combat a surge in COVID-19 cases.

Brent crude futures were trading at USD111.41 a barrel at 0107 GMT, down USD1.07, or 1.0 percent, after falling as low as USD109.97. In early trading, U.S. West Texas Intermediate (WTI) crude futures touched a low of USD103.46 and were trading at USD105.17, down 79 cents, or 0.8 percent. On Monday, both benchmark contracts fell roughly 7 percent.

On Tuesday, Ukraine and Russia were scheduled to meet in Istanbul for the first time in almost two weeks for peace talks. Oil supply has been constrained as a result of sanctions imposed on Russia after it invaded Ukraine, sending prices to 14-year highs earlier this month. Russia's efforts in Ukraine are described as a "special operation" aimed at disarming its neighbour.

"Oil prices are under pressure again on anticipation of a peace deal between Ukraine and Russia, which might lead to a relaxation of sanctions or a boycott of Russian oil by the West," said Nissan Securities' general manager of research Hiroyuki Kikukawa. "A successful ceasefire may potentially rekindle hopes for a nuclear deal with Iran," he added.

Shanghai's two-stage lockdown, which will last nine days, is projected to impact fuel consumption in China, the world's largest oil importer, counteracting supply concerns. According to ANZ Research experts, China's financial centre accounts for around 4 percent of the country's oil consumption.

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