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Oil Gets Rare, Late Week Boost From IEA Demand Outlook

By Barani Krishnan - The global energy agency that rarely helps the positive case in oil has given a friendly boost to those long crude, just as the week comes to an end.

Crude prices jumped more than 1% on Friday after the International Energy Agency bumped up its 2020 forecast for global oil demand, lifting a market that took its worst hammering in six weeks in the previous session.

The IEA’s outlook on oil has typically been dour over the past few years, putting it at odds with the Saudi-dominated OPEC — or Organization of the Petroleum Exporting Countries — whose members are determined to keep crude prices supported under any condition.

The Paris-based IEA raised its demand forecast to 92.1 million barrels per day, up 400,000 bpd from its outlook last month, citing a smaller-than-expected second-quarter decline.

New York-traded West Texas Intermediate, the benchmark for U.S. crude futures, was up 97 cents, or 2.4%, at $40.59 per barrel by 2:00 PM ET (18:00 GMT.

London-traded Brent, the global benchmark for oil, also gained 97 cents, or 2.2%, to trade at $43.32.

For the week, WTI was flat while Brent rose more than 1%.

Aiding the IEA’s outlook on crude was a slight weekly drop in the U.S. oil rig count and positive news on Covid-19 vaccine development.

The weekly survey of rigs actively-drilling for oil in the United States fell by four to 181, indicating that crude production was still somewhat under control despite recent trends indicating higher output.

On the vaccine front, Gilead Sciences (NASDAQ:GILD) released data on Friday showing its antiviral drug, remdesivir, cut the risk of death for severely sick coronavirus patients by 62% compared with standard care alone, sending its shares up more than 2%.

Biontech also delivered positive news in the race of a vaccine, with CEO Ugur Sahin reportedly claiming the company could have a treatment ready for approval by December, according to The Wall Street Journal

Yet, a surge in new coronavirus cases in the United States tempered expectations for a fast recovery in fuel consumption. Record high U.S. infection numbers in a day cast also doubts over the pace of economic reopenings from lockdowns, as well as the resumption of school in the fall season.

“After the IEA improved their oil demand forecast for the rest of the year, WTI crude remains anchored below the $41 level and will likely struggle for any major moves until after Tuesday’s OPEC+ meeting,” said Ed Moya, analyst at New York’s OANDA.

OPEC+ is the wider alliance of oil exporting group led by Saudi Arabia and assisted by key ally Russia.

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