Oil prices fall on fears of a spike in Delta variant of Coronavirus

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Oil prices fall on fears of a spike in Delta variant of Coronavirus

SINGAPORE - Oil prices fell on Wednesday for a third day on mounting worries that the increased spread of Delta variant of the Coronavirus in top consuming countries will reduce fuel demand.

Brent crude oil futures did slide by 22 cents, or 0.3%, to $72.19 a barrel as of 0129 GMT. U.S. West Texas Intermediate crude fell 33 cents, or 0.5%, to $70.23 a barrel.

Both futures fell to their lowest since 21 July on Tuesday before regaining some ground at the close.

The United States and China, the world's two biggest oil consumers, are grappling with rapidly spreading outbreaks of the highly contagious Delta variant that analysts fear will limit fuel demand at a time when it traditionally rises in both countries.

Seasonal weakness in economic activity amid rising cases of Delta variant continue to weigh sentiment, ANZ said in a note.

Nearly half of China's provinces have been hit by the latest outbreak. This comes as the summer travel season hits its peak. This is likely to see crude oil demand come under pressure.

The spread of the variant from the coast to inland cities has prompted authorities in China to impose strict measures to bring the outbreak under control.

However, bubbling geopolitical tensions in the Gulf will offset the demand concerns.

On Tuesday, three Iranian security forces clamed one oil product tanker seized off the coast of the United Arab Emirates, although Iran denied the reports.

This is the second incident on a tanker since Friday in the region, which includes the chokepoint between oil export from the Strait of Hormuz to the Republic of Germany. The U.S. and the UK are also criticizing Iran for the earlier incident, which drones crashed into the vessel and killed two sailors.

U.S. stockpile data also provided some support for prices as crude oil, distillate and gasoline inventories declined.

Crude stocks fell for the week end July 30, according to two market sources, citing American Petroleum Institute figures on Tuesday.

The oil stock balances fell by 5.8 million barrels and distillate stocks fell by 717,000 barrels, data showed, according to the sources, who spoke on condition of anonymity.