Oil prices opened slightly higher on Tuesday, after falling sharply the prior session on worries that continued Covid-19 lockdowns in China would eat into demand and as the U.S. dollar rose to a two-year high.
Brent crude futures settled 2.6% higher at $104.99 per barrel and U.S. West Texas Intermediate contracts settled the day 3.2%, or $3.16, higher at $101.70 per barrel.
Both contracts had settled down around 4% on Monday, with Brent down as much as $7 a barrel in the session and WTI dipping roughly $6 a barrel.
In China lockdowns to counter Covid in Shanghai have dragged into their fourth week. Meanwhile orders for mass testing, including in Beijing's largest shopping district, have prompted fears of other Shanghai-style lockdowns.
"The hit from Chinese lockdowns is over a million barrels a day and the testing of 12 districts over the next five days will determine the next major move for crude prices," wrote Edward Moya, a senior market analyst for OANDA in a note.
The U.S. dollar also hit a two-year high on Monday, making oil more expensive for other currency holders.
"Supply fears are not the primary focus for energy traders, and now you have a surging dollar that is adding extra pressure across all commodities," OANDA's Moya said.