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Oil falls as Opec+ plans to raise output while virus cases increase
[NEW YORK] 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 US crude have remained above US$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 stabilise.
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 42 cents, or 1 per cent, to settle at US$43.37 a barrel. US West Texas Intermediate (WTI) crude fell 45 cents, or 1.1 per cent, to settle at US$40.75 a barrel.
Both benchmarks rose 2 per cent on Wednesday following a sharp drawdown in US crude inventories.
International Energy Agency executive director Fatih Birol said on Wednesday that global oil markets are rebalancing, with prices of about US$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.