LONDON (Reuters) - Oil prices fell on Thursday after OPEC and other producers including Russia agreed to ease record supply curbs from August, though the drop was cushioned by tightening global inventories as economic activity picks up.

Brent crude fell 29 cents, or 0.66%, to $43.50 a barrel by 1121 GMT. West Texas Intermediate (WTI) crude was down 43 cents, or 1%, to $40.77 per barrel.

Both contracts rose 2% the previous day after a sharp drop in U.S. crude inventories.

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.

They will reduce their cuts to 7.7 million barrels per day through December from the 9.7 million bpd cuts in place since May.

“Things are getting back to normal on the oil market,” said Norbert Rücker, head of economics research at Julius Baer.

“The petro-nations announced the partial lifting of their production restrictions as oil demand rebounds and signs of an easing supply glut emerge... The economic recovery puts demand above supply.”

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 is because countries in the grouping which over-produced earlier this year would compensate with extra August-September cuts, he said.

In a sign of the recovery, China’s refinery daily crude oil throughput in June climbed 9% from a year earlier, reaching its highest level on record amid rising gasoline and diesel consumption.

Analysts at Dutch bank ING expect the oil market to remain in a supply deficit for this year and throughout 2021 with Brent forecast to average $40 per barrel in the third quarter of 2020 and $50 in the fourth quarter.

International Energy Agency Executive Director Fatih Birol said on Wednesday that global oil markets are slowly rebalancing, with prices of about $40 per barrel expected in coming months.