Crude oil prices were heading for a weekly 5% gain on Friday as worries amid the coronavirus outbreak eased to a certain extent after the World Health Organization (WHO) warned about drawing incorrect conclusions from reported numbers.
International benchmark Brent crude was trading at $57.16 per barrel at 1205 GMT on Friday, heading for a 5.5% weekly gain, after it opened Monday at $57.16 a barrel.
American benchmark West Texas Intermediate (WTI) was at $52.12 a barrel at the same time on Friday. WTI was heading for a 5% weekly increase after starting the week at $49.61 per barrel.
Both benchmarks posted their first weekly gain since the week ending Jan. 3 when rising tensions in the Middle East between Iran and the U.S. threatened secure oil supply from the region.
Yet, the glut of oil supply still remains a negative push in the global oil market because of low demand from China and its neighbors in Asia.
Global oil demand is estimated to decrease by 435,000 barrels per day (bpd) in the first quarter of 2020, from the same period of last year, to mark the first quarterly contraction in more than 10 years, the International Energy Agency’s (IEA) said in its monthly oil report on Thursday.
Oil demand in China, the world's second largest oil consumer, will also be reduced by lower economic activity, the IEA said.
On the demand side, all eyes will be on China in the following weeks, which reported 63,851 confirmed cases, and a death toll of 1,381 out of which 121 deaths were in the last 24 hours.
The WHO said Thursday most of these cases relate to "a period going back over days and weeks and are retrospectively reported as cases, sometimes back to the beginning of the outbreak itself."
"So we are not dealing, from what we understand, with a spike in cases of 14,000 on one day," WHO Health Emergencies Program Executive Director Michael Ryan said in a media briefing.
"... We need to be cautious when drawing conclusions from daily reported numbers," he warned.
On the supply side of the oil market, the focus will be on the meeting between OPEC and its allies in Vienna, Austria on March 5-6.
The group, dubbed as OPEC , had agreed on Dec. 6 to curb oil production by an additional 500,000 bpd, bringing the total cut to 1.7 million bpd.
OPEC is expected to cut output by an additional 600,000 bpd in March to trim some of the oversupply in the market and support prices.
Their move, however, could "not be enough to fill the demand gap now exacerbated by the coronavirus," Rystad Energy’s Senior Vice President and Head of Oil Markets Bjornar Tonhaugen said in a statement on Thursday.
"The economic shut-down in China will cause the largest negative oil demand shock since 2008," he added.