Oil climbs as International Energy Agency boosts demand forecast

Bloomberg WTI heads for weekly decline as virus cases increase

Bloomberg WTI heads for weekly decline as virus cases increase

The Paris-based International Energy Agency (IEA) bumped up its 2020 oil demand forecast on Friday but warned that the spread of COVID-19 posed a risk to the outlook.

"The planned easing of OPEC+ production cuts next month. and a potential rebound in US production could add pressure on the supply side of the equation", Stephen Innes, chief global markets strategist at AxiCorp said in a note. In the case of Iran, exports fell from 60.519 billion dollars in 2018 to almost 19.233 billion in 2019, a 68 percent decline, the survey noted.

It is expected that OPEC + may agree to pump in additional 2 million barrels of oil per day from next month.

Brent crude fell 29 cents, or 0.7%, to $42.95 a barrel.

Iraq and the U.A.E. - two of the biggest OPEC producers - along with Qatar increased their official selling prices of so-called medium-sour varieties for August from a month earlier.

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In an interview in April, Prince Abdulaziz bin Salman, the Saudi oil minister, said that Saudi Arabia would go to great lengths to protect the Asian market, the destination of around 50 percent of Saudi oil.

Premier Oil has continued to struggle, however; with the stock falling 24% since hitting a 15-week high of 53p back on 23 June and looking likely to continue its trend lower this week.

But Covid-19 is now putting a shadow over the demand recovery, which is expected slower than what the market expected when the OPEC+ deal was in the making.

The Organization of Petroleum Exporting Countries forecasts the need for its crude will surge by 25% in 2021 to average 29.8 million barrels a day, higher than the level required in 2019, according to a monthly report.

Crucial users of the Corporation of the Petroleum Exporting Nations and its Russia-led allies are set to meet up with by means of website convention Wednesday to discussion the group's recent and upcoming generation.

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The increase in supply would come as the still-raging pandemic clouds the demand outlook.

Cooperation within the cartel has thus far been effective in supporting global oil prices through the current economic downturn.

In early June, with road traffic, air travel and other activity still depressed, the group, known as OPEC Plus, chose to extend the 9.7 million barrel-a-day cuts through July.

U.S. West Texas Intermediate crude was at $40.17 a barrel, down 40 cents, or 1%.

"We have assumed that Opec+ countries stick to their targets fully for 2020-21 and the increase in levels won't be enough to push the market into surplus, provided demand recovers as strongly as the IEA assumes", he added.

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