Oil oscillated between gains and losses as an uncertain economic outlook overshadowed signals of a tighter crude market with Iraq pledging to make extra output cuts this month.

Iraq will cut production 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.

But the path to an economic recovery remains shaky, weighing on U.S. equities and demand for crude oil. Investors are searching for signals as to whether lawmakers are making progress toward a virus relief package.

“There’s been some fiery language out of Capitol Hill here this morning about where they stand with negotiations,” said John Kilduff, a partner at Again Capital LLC. “So with economic data still not being good for crude oil and product demand, you’re going to get these headwinds that remain in the present even when you get some rays of hope.”

Oil is testing the upper bound of its recent trading range, where futures in New York have struggled to rally far beyond $40 a barrel. U.S. crude stockpiles falling for two straight weeks and a weaker dollar have provided support for prices, but rising coronavirus cases are continuing to weigh on sentiment. The drop in U.S. gasoline demand is getting worse, according to Standard Chartered Plc, with analysts saying the decline in August from year-ago levels will get steeper.

“Iraq pledging further cuts to meet its OPEC+ obligations is welcome news in buttressing the overall compliance level of the producer group,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA. “Elevated OPEC compliance with pledge supply cuts is a required condition for oil prices to move higher, considering that there is uncertainty in the economic outlook.”

In physical markets, Mars Blend, a high-sulfur crude, rose to as much as $1.35 a barrel above Nymex WTI futures this week, the widest premium in roughly a month, but has eased off slightly in the last three sessions. Heavy Louisiana Sweet crude climbed 25 cents to $1.60 a barrel over Nymex oil futures on Thursday, the largest premium in almost two weeks.