Oil prices slip after OPEC, allies agree to loosen oil supply curbs

* OPEC+ grouping set to ease output cuts to 7.7 mln bpd from
Aug
* U.S. crude inventories fell 7.5 mln bbls last week -EIA
* Prices expected at about $40/bbl in coming months -IEA's
Birol

By Yuka Obayashi
TOKYO, July 16 (Reuters) - Oil prices slid on Thursday after
OPEC and allies such as Russia agreed to ease record supply
curbs from August, though the drop was cushioned by hopes for a
swift U.S. demand pick-up after a bigger-than-expected drawdown
from the country's crude stocks.
Brent crude LCOc1 fell 13 cents, or 0.3%, at $43.66 a
barrel by 0015 GMT, and U.S. West Texas Intermediate (WTI) crude
CLc1 dropped 18 cents, or 0.4%, to $41.02 a barrel. They rose
2% the previous day, helped by the U.S. crude inventories drop.
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 as the global economy
slowly recovers from the coronavirus pandemic. OPEC+ has been cutting output since May by 9.7 million
barrels per day, or 10% of global supply, but from August, cuts
will officially taper to 7.7 million bpd until December.
"Some investors took profits after the OPEC+ decision, but a
big draw in U.S. crude provided some support," Kazuhiko Saito,
chief analyst at Fujitomi Co said.
Data from the Energy Information Administration showed U.S.
crude inventories fell 7.5 million barrels last week, shrinking
much more than the 2.1 million-barrel drop expected by analysts
in a Reuters poll. EIA/S
Despite the official OPEC+ accord, 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. That's
because countries in the grouping which over-produced earlier
this year would compensate by making extra August-September
cuts, the minister said.
Still, oil prices are expected to remain static as an
increase in crude processed by refineries is likely to offset
higher supply volumes, Rystad Energy said in a note.
"We find that prices will have to stay where they are for
the rest of 2020 as any uptick will hurt already struggling
refining margins and negatively impact the most-needed recovery
in refinery runs," it said.
Elsewhere, International Energy Agency Executive Director
Fatih Birol said on Wednesday that global oil markets are slowly
rebalancing after the shocks seen during the coronavirus
lockdown, with prices expected at about $40/barrel in the coming
months.