Oil prices fell 1 per cent on Thursday after OPEC+ agreed to ease record supply curbs and as new infections of the novel coronavirus continue to surge in the United States.
Both benchmark Brent and U.S. crude have remained above $40 a barrel for the last several weeks. The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, lowered daily supply beginning in May and demand worldwide has rebounding, helping prices to stabilize.
Fears of a second wave of cases of COVID-19 - led by the United States - are keeping the rally in check. Nearly 600,000 people worldwide have died of the disease, according to a Reuters tally.
Brent fell 52 cents, or 1.2 per cent, to $43.28 a barrel by 1:01 p.m. EDT. U.S. West Texas Intermediate (WTI) crude fell 44 cents, or 1 per cent, to $40.77 a barrel.
Both benchmarks rose 2 per cent on Wednesday following a sharp drawdown in U.S. crude inventories.
International Energy Agency Executive Director Fatih Birol said on Wednesday that global oil markets are rebalancing, with prices of about $40 per barrel expected in coming months.
OPEC+ agreed on Wednesday to scale back oil production cuts from August, reducing cuts by 2 million barrels per day to 7.7 million bpd through December.
“Nobody could really expect OPEC+ to keep the 9.7 million bpd curtailments into August,” said Rystad Energy’s senior oil markets analyst Paola Rodriguez-Masiu. “Boosting output by 2 million bpd is not little, but the demand recovery, even though a little slower than expected, justifies it.”
Saudi Arabian Energy Minister Prince Abdulaziz bin Salman said production cuts in August and September would end up amounting to about 8.1 million-8.3 million bpd, more than the headline number.
In a sign of recovery, China’s refinery daily crude oil throughput in June climbed 9 per cent from a year earlier, reaching its highest level on record due to rising consumption.
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