Oil Down On The Week, But Demand Recovery Strong In U.S. And Eurozone

However, analysts predict a 20 percent demand drop in Covid-infested India: File Image/Pixabay

Oil achieved another session of modest gains on Friday based on bullish economic data from the U.S. and Europe, although persistent worries of rising Covid rates in India that governed trading for the past few sessions took its toll and caused two key benchmarks to fall about 1 percent for the week.

According to refiners and retailers, India's second Covid wave could cause a 20 percent plunge in the consumption of diesel and gasoline in April due to renewed restrictions, which some pundits say could last weeks or a month.

Brent settled up 77 cents, 1.1 percent, to $66.11 per barrel, and West Texas Intermediate gained 71 cents, or 1.2 percent, to $62.14 per barrel.

In the U.S., data revealed that the number of citizens filing new claims for unemployment benefits fell to a 13-month low last week, and American refiner Valero said demand for gasoline and diesel were at 93 percent and 100 percent of pre-pandemic levels.

Meanwhile, data from the Euro zone Purchasing Managers' Index for April showed a stronger-than-expected recovery and more European states began easing coronavirus lockdowns.

John Kilduff, founding partner at Again Capital, remarked, "The PMIs across Europe were really off the charts, especially following the strong unemployment report in the U.S."

More good news on Friday came in the form of oilfield giant Schlumberger, which joined rivals Halliburton Co. and Baker Hughes Co. in predicting expansion in overseas work and global demand returning to pre-pandemic levels by the end of next year, if not sooner.

Olivier Le Peuch, chief executive officer at Schlumberger, said, "A new growth cycle has finally commenced: there is an increasingly positive sentiment in the industry outlook as the recovery strengthens despite the lingering concerns regarding the Covid-19 crisis."

Le Peuch added that he expects an increase in U.S. onshore activity in the second quarter that will level off during the second half.

But it wouldn't be a normal crude trading session without an expression of pessimism, and on Friday that came from Edward Moya, senior market analyst at Oanda Corp., who said rising infections in India and some parts of Asia show that "the global economic recovery is not going to be balanced by any means, and that's going to derail the international travel situation."