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

NEW YORK: 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.

Both benchmark Brent and US 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%, to $43.28 a barrel by 1:01 p.m. EDT (1701 GMT). US West Texas Intermediate (WTI) crude fell 44 cents, or 1%, to $40.77 a barrel.

Both benchmarks rose 2% 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 $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.