Oil prices fall on US crude stock build, Delta variant spread

NEW YORK: Oil prices fell for a third day in a row to a two-week low on Wednesday on a surprise build in US crude stockpiles and as the spread of the coronavirus Delta variant outweighed the impact of Mideast geopolitical tensions.

The US Energy Information Administration (EIA) said crude stockpiles rose 3.6 million barrels during the week ended July 30.

That compares with the 3.1-million barrel draw analysts forecast in a Reuters poll and the 0.9-million barrel decline the American Petroleum Institute (API) reported on Tuesday.

Brent futures fell $1.09, or 1.5%, to $71.32 a barrel by 10:51 a.m. EDT (1451 GMT), while US West Texas Intermediate (WTI) crude fell $1.43, or 2.0%, to $69.13.

That puts both benchmarks on track for their lowest since July 20. For Brent, it puts the contract down for a third day in a row for the first time since late May.

US oil may retest support at $69.72

"Worries continue to grow over the spread of the Delta variant in China, which has weighed heavily on oil prices in recent days," analysts at bank ING said.

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 anticipate will limit fuel demand at a time when it traditionally rises in both countries.

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

Oil prices hit by concern over Chinese economy and higher supply

Tensions in the Mideast Gulf, meanwhile, supported prices.

On Tuesday, three maritime security sources claimed Iranian-backed forces seized an oil product tanker off the coast of the United Arab Emirates, though Iran denied the reports.

This is the second attack on a tanker since Friday in the region, which includes the Strait of Hormuz. The United Kingdom and the United States are also blaming Iran for the earlier incident, in which drones crashed into the vessel and killed two sailors. Iran denies the reports.