Oil prices edged higher on Thursday as investors focused on the possibility of deeper supply cuts from the world's biggest producers.
That said, the agency says that the impact of the coronavirus outbreak will be felt by the oil market throughout the year and it is "hard to be precise about the impact" now.More news: Apple Pay to rack up $686 billion in transactions within five years
U.S. gasoline futures jumped more than one percent supported by outages at ExxonMobil Corp's 502,500 bpd Baton Rouge refinery in Louisiana and Phillips 66's 285,000-bpd Bayway refinery in New Jersey.
The outbreak has prompted Saudi Arabia, the world's largest oil exporter, to push its allies in the Organization of Petroleum Exporting Countries and beyond to consider an emergency meeting and further production cuts.
"As long as the coronavirus does not show strong signs that the spreading of the virus is intensifying, WTI crude could make a run towards the mid-$50s", he added.
In the second quarter it said it expected oil demand to grow 1.2 million barrels per day before normalizing in the third quarter with growth of 1.5 million bpd on likely economic stimulus measures in China.More news: Roku Earnings Beats Estimates Thanks to the Streaming Wars
Back to the headline reading, IEA had previously forecast a growth of 800k bpd in Q1 compared to a year earlier but now expect a contraction of 435k bpd instead - the first contraction since the global financial crisis back in 2009. It has risen 5.4% since last Friday, its first weekly increase in six weeks.
"Lower oil prices, if sustained, are also bad news for highly responsive USA oil companies, but we are unlikely to see an impact on output growth until later in the year", the agency said.
"You can argue that maybe those demand numbers aren't as bad as the market thought they could be", he noted.More news: Washington Redskins to cut cornerback Josh Norman