Oil prices rose 2% on Wednesday, supported by a sharp drop in U.S. crude oil inventories last week, but further upside was limited as the organization of Petroleum Exporting Countries (OPEC) and its allies plan to reduce production cuts from August as the global economy gradually recovers from the new coronavirus pandemic.

Brent crude rose $0.89, or 2.1%, to $43.79 a barrel, while U.S. crude rose $0.91, or 2.3%, to $41.20 a barrel.

Crude oil inventories fell 7.5 million barrels to 531.7 million barrels in the week ended July 10, according to the energy information administration on Wednesday, compared with a 2.1 million barrel reduction expected by analysts in a Reuters survey.

“This report tells us that inventories will fall further in the coming weeks,” said Phil Flynn, an analyst at price futures group. We’re going to see more signs of tightening in the market before August, and we’re likely to see more signs of supply tightening soon. ”

OPEC and non OPEC oil producing countries have agreed to reduce production to 7.7 million barrels a day from August, the organization of Petroleum Exporting Countries (OPEC) said in a statement on the 15th.

The Joint Ministerial Supervision Committee of OPEC and non OPEC oil producing countries held a video conference on the same day. The conference issued a statement saying that as countries around the world slowly recover from the new epidemic, the global economy shows signs of improvement, and will enter the second phase of the oil production reduction agreement from August, that is, the scale of production reduction will be reduced to 7.7 million barrels per day.

According to Reuters, the OPEC + alliance of OPEC and its allies has been implementing a production reduction agreement of 9.7 million B / D, accounting for 10% of global supply, after the outbreak caused a sharp drop in global demand by a third, Reuters reported.

“We will enter the next phase of the production reduction agreement, and as demand continues to recover, the additional supply from the planned reduction will be absorbed,” Saudi energy minister Prince Abdel Aziz said after the Joint Ministerial oversight committee meeting

The experimental new coronal vaccine of Moderna was shown to be safe in an early ongoing study, with immune responses in all 45 healthy volunteers, US researchers said on Tuesday. The news brought support to oil prices, but traders were still nervous about the rise in new cases in the United States and other countries.