Oil prices rise 2% but post weekly decline on demand fears

Oil rose more than 2% in volatile trading on Friday, but finished the week about 7% lower as a new wave of coronavirus infections across Europe dampened hopes that fuel demand would recover soon.

Brent crude settled up $1.25 a barrel, or 2%, at $64.53 a barrel. West Texas Intermediate (WTI) U.S. crude rose $1.42, or 2.4%, to $61.42. During the session, both traded within a wide range of more than $2 a barrel. The weekly loss for both benchmarks was just under 7%.

On Thursday, oil slid 7% as large European economies reimposed lockdowns, while vaccination programs there were slowed by distribution issues and fears of side effects.

Prices rose on Friday as many market players viewed the sell-off as overdone.

U.S. shale production has swelled global oil supplies as fuel demand cratered during the pandemic. U.S. drillers added nine oil rigs in this week, the biggest weekly increase since January, oil services firm Baker Hughes said.[RIG/U]

Concerns about vaccine rollouts capped oil’s gains.

Goldman Sachs said oil market headwinds related to European Union demand and Iran supply would slow market rebalancing in the second quarter, though it expects the Organization of the Petroleum Exporting Countries and allies to act to offset that.

Iran has moved record amounts of crude oil to top client China in recent months while India’s state refiners have added Iranian oil to their annual import plans on the assumption that U.S. sanctions on the OPEC supplier will soon ease.

Goldman expects a significant increase in global oil demand in the coming months, lifting its Brent price forecast to $80 a barrel this summer.

Hedge funds and other money managers raised their net long U.S. crude futures and options positions in the latest week, the U.S. Commodity Futures Trading Commission (CFTC) said.