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London — Oil prices fell below $75 a barrel on Wednesday, taking a breather after strong gains this week, as investors assessed the impact of the Omicron coronavirus variant on the global economy and fuel demand.

Brent crude futures were down 83c, or 1.1%, to $74.61 a barrel at 11.13am GMT, after settling 3.2% higher on Tuesday.

US West Texas Intermediate crude was at $71.07 a barrel, down 98c or 1.4%, having gained 3.7% in the previous session.

After falling by more than 16% since November 25 to about $69 a barrel, Brent crude prices have rebounded by more than 8% since December 1 after signs that Omicron has had only a limited impact on oil demand.

“About two-thirds of the previous price slide [has] been corrected, a downswing that had been brought about by demand concerns sparked by the new Omicron variant. These now appear to be exaggerated,” Commerzbank said in a note.

“There has been no noticeable slowing effect on oil demand as yet. Even aviation, the sector that should have been hit first, has seen only a marginal decrease in seating capacity.”

But reports that British Prime Minister Boris Johnson was set to tighten Covid restrictions, including advice to work from home, revived fears of a slowdown in activity.

The market was also focused on rising geopolitical tensions as talks between Washington and Tehran over Iran’s nuclear programme were set to resume this week as Western officials voiced dismay at sweeping Iranian demands.

An easing of US sanctions is expected to lead to higher exports of Iranian oil, which could add downward pressure on prices.

Tensions between Western powers and Russia over Ukraine also remained high after President Joe Biden warned Russian President Vladimir Putin on Tuesday that the West would impose “strong economic and other measures” on Russia if it invades Ukraine. Putin demanded guarantees that Nato wouldn’t expand farther eastward.

Oil markets barely reacted to US weekly inventory data. US crude stocks fell last week while petroleum and distillate inventories rose, according to market sources citing American Petroleum Institute figures on Tuesday.

Analysts polled by Reuters forecast US crude inventory data would decline for a second straight week.



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