Oil falls as OPEC+ plans to raise output while virus cases increase

NEW YORK (Reuters) - Oil prices fell 1% 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.

FILE PHOTO: The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, U.S., November 22, 2019. REUTERS/Angus Mordant

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 LCOc1 fell 42 cents, or 1%, to settle at $43.37 a barrel. U.S. West Texas Intermediate (WTI) crude CLc1 fell 45 cents, or 1.1%, to settle at $40.75 a barrel.

Both benchmarks rose 2% on Wednesday following a sharp drawdown in U.S. crude inventories. [EIA/S]

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% from a year earlier, reaching its highest level on record due to rising consumption.

Reporting by Stephanie Kelly in New York; Additional reporting Ron Bousso in London and by Yuka Obayashi in Tokyo; Editing by Marguerita Choy, Jason Neely and Richard Chang