Oil drops with output cuts weighed against second-wave angst

Oil edged lower as investors weighed signs major producers are continuing to cut output against fears of a second coronavirus wave.

Futures in New York fell below $37 a barrel after rising 2.4% on Monday. Saudi Arabia cut term supplies to some Asian refiners by as much as 40% and Iraq said it will make deep reductions as they comply with the OPEC+ deal. U.S. shale is also still in retreat, with the Energy Information Administration forecasting output will drop to 7.63 million barrels a day in July.

The production curbs are going some way to offsetting worries about a new virus outbreak in Beijing as well as sharp increases in infections in some U.S. states including Arizona and Florida. In a move that also helped to counter these concerns, the Federal Reserve said it would start buying a broad portfolio of corporate bonds, aiding sentiment across financial markets.