2020.07.1610:10:00UTC+00Oil Declines As OPEC+ Agrees To Ease Supply Curbs

Oil prices fell on Thursday after OPEC and allies such as Russia agreed to ease record supply curbs from August, renewing concerns over excess supply.

Benchmark Brent crude fell 30 cents, or 0.7 percent, to $43.49 a barrel, while U.S. West Texas Intermediate (WTI) crude futures were down 45 cents, or 1.1 percent, at $40.75 a barrel.

Brent crude prices rose 1.75 percent in the previous session and WTI crude oil futures jumped 2.3 percent after official data showed a marked decline in U.S. crude inventories in the week ended July 10.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, agreed on Wednesday to scale back oil production cuts from August, effectively raising output.

OPEC+ will allow record production cuts of 9.7 million barrels per day to decrease to 7.7 million barrels per day starting in August, in line with a previous OPEC+ agreement to gradually taper the reductions.

However, those countries which did not meet their quota limits in May and June are expected to reduce production even more starting in August to compensate for their overproduction.

At a press conference following a meeting of the group, Saudi Arabia's Minister of Energy Prince Abdulaziz bin Salman said actual cuts, including the reductions from countries compensating for that overproduction, will be at roughly 8.1 million to 8.2 million barrels per day, pending data from June.

The minister said the 8.1 million-barrel per day reduction is probably the floor, with the ceiling for the cuts at roughly 8.34 million barrels.

Meanwhile, data released by Energy Information Administration on Wednesday showed U.S. crude inventories dropped by 7.5 million barrels last week, nearly four time the expected drop of about 2.1 million barrels.

On Tuesday, the American Petroleum Institute said U.S. crude inventories dropped by 8.3 million barrels in the week ending July 10.