Futures closed at the highest level since early March on Wednesday after U.S. crude inventories dropped to the lowest in more than three months. Still, gasoline and distillate stockpiles rose by a combined 2 million barrels last week as the summer driving season nears its end, capping further gains in prices.

Iraq will cut output in August by an additional 400,000 barrels a day to compensate for missing its production target in previous months, the state oil-marketing organization Somo said. The pledge from OPEC’s second-biggest producer comes as the Organization of Petroleum Exporting Countries and its allies unwind some of their record output cuts this month.

Oil has closely followed the dollar in recent weeks. The currency was little changed on Thursday, swinging between gains and losses. U.S. equity futures erased declines after weekly jobless claims data showed the labor market is improving.

While New York crude is up about 5% this week, following days of being anchored near $40, there are plenty of reasons for traders to be cautious. Data show that refining crude into fuels in Europe continues to be loss-making, pointing to the patchy recovery in demand. Saudi Arabia cut oil prices for Asia and Europe as a resurgent coronavirus crimps demand and poses a big risk to any economic recovery.

“The focus will remain on the dollar’s direction, stimulus packages, trade deals and coronavirus lockdown fears,” said ABN Amro senior energy economist, Hans van Cleef. “The upside for the oil price remains limited.”

It’s not just Europe that’s showing weak refining margins. The so-called 3-2-1 crack for combined gasoline and diesel against U.S. WTI — a rough profit gauge for processing a barrel of crude — was below $10 a barrel for a third consecutive day on Thursday. The measure is at its lowest seasonal level in nearly a decade as the pandemic keeps Americans off the road during the normally busy summer driving season.