'Huge increase' in crude prices not expected: IEA executive director

WTI and Brent Crude Oil

WTI and Brent Crude Oil

Last year, the IEA predicted that 2019 oil demand would grow by 1.5 million bpd but had cut the growth forecast to 1.2 million bpd in June this year.

West Texas Intermediate crude CLc1 futures fell 24 cents to $55.06 a barrel.

But he said he did not expect a big jump in prices because there was "a lot of oil and this is mainly thanks to the shale revolution in the United States". They were forecast to fall by 4.2 million barrels, according to analysts polled by S&P Global Platts.

In the Middle East, the Iranian tanker seizing comes after a series attacks and damages to ships in the Strait of Hormuz, the world's most sensitive oil-transportation chokepoint, which remains the center of tensions between the Islamic Republic and the USA which exited a nuclear agreement pact and leveled fresh sanctions against Tehran.

The episode has injected further geopolitical risk into the oil market.

A senior Trump administration official said on Friday the United States will destroy any Iranian drones that fly too close to its ships.

Oil prices rose more than 1% on Friday after the U.S. Navy destroyed an Iranian drone in the Strait of Hormuz, a major chokepoint for global crude flows, again raising tensions in the Middle East.

Prices were also buoyed Friday by indications the U.S. Federal Reserve will cut rates aggressively to support the economy.

IEA cuts oil demand forecast.

Drillers cut five oil rigs in the week to July 19, bringing the total count down to 779, the lowest since February 2018, General Electric Co's GE.N Baker Hughes energy services firm said in its closely followed report on Friday.

Earlier gains for oil futures on the back of increased tensions in the Middle East gave way to sizeable declines yesterday.

In a Reuters in interview late-Thursday, the International Energy Agency (IEA) Executive Director Faith Birol said the Agency is making a downward revision to its 2019 global oil demand growth outlook to 1.1 million barrels per day (bpd) and leaves scope for further downgrade should the global and Chinese economy slowdown further.

The recent Middle East conflict come amid reports of a softening rhetoric between Iran and the US officials, which some say could push crude prices higher as new supplies hit the market if energy-export sanctions are lifted.