Oil Posts Weekly Losses As Confusion Prevails Over The True State Of Demand

Friday saw more conflicting reports about overall economic health: File Image/Pixabay

Amid rampant concerns about demand and conflicting reports throughout the week about the state of the economy overall, oil prices on Friday achieved minimal gains and fell for the week.

Brent settled up 56 cents at $81.66 per barrel but posted a weekly loss of 5.4 percent; West Texas Intermediate rose 50 cents to $77.87 per barrel but fell 5.6 percent for the week.

As was the case in previous sessions, Friday's concerns about waning demand (the result of inflation coupled with bank interest rate hikes) was countered by bullish news, case in point: according to surveys, U.S. and Euro zone business activity escalated in April.

S&P Global's U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, increased to 53.5 this month, the highest level since last May.

Plus, the S&P Global/CIPS UK Composite Purchasing Mangers' Index showed the slowest input cost inflation in over two years in Britain, whose businesses reported their busiest month in a year.

Still, analysts insist that the labour market overall is cooling, retail sales are declining, and manufacturing output is slumping.

ING economists said in a note, "Manufacturing weakness remains a concern and dampens the upturn."

Yet more conflicting messages on Friday came in the form of rising demand in China, which some pundits said that in conjunction with the Organization of the Petroleum Exporting Countries' (OPEC) recently announced output cut will lead to substantial inventory draws next month.

Commerzbank said in a note, "The foreseeable tightening of supply is likely to push prices up in the medium term."