UPDATE 7-Oil settles below 5-month highs amid fuel demand worries

Reuters

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    * Iraq says will make additional oil cuts in August
    * Recent dollar weakness supports oil prices
    * Rise in coronavirus cases remains a nagging concern
    * U.S. crude stocks draw, but refined products rise - EIA

 (Updates with settlement prices)
    By Jessica Resnick-Ault
    NEW YORK, Aug 6 (Reuters) - Oil prices hovered below
five-month highs on Thursday, falling after a session in which
bearish sentiment about fuel demand counteracted optimism about
Iraq's supply cuts, pushing the benchmarks in and out of
positive territory.
    Concerns remain that demand is depressed by the economic
slowdown due to the coronavirus pandemic, said Phil Flynn,
senior analyst at Price Futures Group in Chicago. 
    "Everyone is waiting for the coronavirus relief package to
come through to give a bounce to the economy," he said.  
    Brent crude  LCOc1  settled down 8 cents at $45.09 a barrel,
while U.S. crude  CLc1  fell 24 cents to $41.95 after a four-day
streak of gains.
    Earlier in the session, planned output cuts from Iraq
boosted the contracts. 
    Iraq said it would make an additional cut in its oil
production of about 400,000 barrels per day in August to
compensate for its overproduction over the past period under the
OPEC supply reduction pact. urn:newsml:reuters.com:*:nL8N2F860S
    The two benchmarks rose to their highest since March 6 in
the previous session after the U.S. government reported a much
bigger-than-expected drop in crude stockpiles.  EIA/S 
    A weaker U.S. dollar was also supportive of oil prices as it
makes dollar-priced oil cheaper for holders of other currencies.
    The dollar index, which measures the greenback against a
basket of six major currencies  .DXY , logged its biggest
monthly percentage fall in a decade in July, and a Reuters poll
found analysts expected it to continue falling into next year.
 urn:newsml:reuters.com:*:nL4N2F72BG
    The index was up around 0.1% Thursday after falling for two
sessions, but stayed near two-year lows.  USD/ 
    Still, oil investors remain wary of rising U.S. refined
product inventories at a time when U.S. central bankers said the
resurgence in coronavirus cases was slowing the economic
recovery in the world's biggest oil consumer.  urn:newsml:reuters.com:*:nL1N2F71NI 
    "In the medium term the weak demand is likely to weigh more
heavily than the positive sentiment (is supportive), which is
why we expect prices to correct in the near future," Commerzbank
analyst Eugen Weinberg said.
    JPMorgan trimmed its oil demand forecast for the second half
of the year by 1.5 million bpd, but raised its average Brent
price forecast for the whole year to $42 a barrel from $40.
 urn:newsml:reuters.com:*:nFWN2F80N5
    Saudi Arabia's state oil giant Aramco cut its September
official selling prices (OSPs) for its Arab light crude for
deliveries to Asia by 30 cents a barrel from August, and left
its prices to the U.S. unchanged from the previous month.
 urn:newsml:reuters.com:*:nD5N2DK02M 
    This briefly lent strength to the market, quelling previous
fears that the producer would slash prices, spiking another
price war, said Bob Yawger, director of Energy Futures at Mizuho
in New York.

 (Additional reporting by Sonali Paul in Melbourne and Seng Li
Peng in Singapore and Shadia Nasralla in London; Editing by
Marguerita Choy, Jan Harvey and Tom Brown)
 ((Jessica.Resnick-Ault@thomsonreuters.com; 917-232-6653))

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