Storage tanks are seen at the Petroineos Ineos petrol refinery in Lavera, France, March 29, 2022.
Storage tanks are seen at the Petroineos Ineos petrol refinery in Lavera, France, March 29, 2022. Reuters / BENOIT TESSIER

Oil prices steadied in volatile trade on Tuesday as growing worries that new coronavirus cases could slow demand offset supply concerns after the United States and Europe planned to impose new sanction on Russia for alleged war crimes in Ukraine.

Brent futures fell 38 cents, or 0.4%, to $107.15 a barrel by 12:29 p.m. EDT (1629 GMT). U.S. West Texas Intermediate (WTI) crude fell 34 cents, or 0.4%, to $102.94.

Chinese authorities extended a lockdown in Shanghai to cover all of the financial center's 26 million people, despite growing anger over quarantine rules in the city.

The West is planning new sanctions against Russia over civilian killings in Ukraine. President Joe Biden's national security adviser said new U.S. sanctions would be announced this week.

The European Union also proposed sweeping new sanctions against Russia, including a ban on coal imports.

German Foreign Minister Annalena Baerbock said the ban on coal will be followed by oil and then gas.

Moscow, meanwhile, said Western allegations Russian forces committed war crimes by executing civilians in the Ukrainian town of Bucha were a "monstrous forgery" aimed at denigrating the Russian army.

Britain urged Group of Seven (G7) and North Atlantic Treaty Organization (NATO) nations to ban Russian ships from their ports, and agree to a timetable to phase out oil and gas imports from Russia.

"The threat of European sanctions on Russian oil remains an upside risk for crude prices," said Craig Erlam, senior market analyst at OANDA, noting "The release of reserves has helped take some of the pressure off amid disruptions to Russian supply."To calm oil prices, U.S.-allied countries agreed last week to a coordinated oil release from strategic reserves for the second time in a month.

Prices rose earlier on Tuesday after sources told Reuters International Energy Agency (IEA) member states were still discussing how much oil they would release.

Supply concerns in several Organization of the Petroleum Exporting Countries and their allies (OPEC+), also supported prices.

Iraq pumped 4.15 million barrels per day (bpd) of oil in March, 222,000 bpd short of its production quota under an agreement with other OPEC+ producers.

OPEC+ member Russia's daily oil and gas condensate production in early April has declined by 4% from March.

Kazakhstan, another OPEC+ producer, cut its oil output forecast to 85.7 million tonnes this year from the previous target of 87.5 million after damage to the Caspian Pipeline Consortium terminal in Russia.

Oil prices could gain some support later Tuesday if analysts forecast are correct and U.S. crude inventories declined by 2.1 million barrels last week. [EIA/S] [API/S]

The American Petroleum Institute (API), an industry group, will issue its inventory report at 4:30 p.m. EDT (2030 GMT) on Tuesday, while the U.S. Energy Information Administration (EIA) will report at 10:30 a.m. EDT (1430 GMT) on Wednesday.