Oil rises but set for weekly loss as economic uncertainty weighs

crude oil

Oil prices edged higher on Friday on strong economic data in the euro zone and Britain, but futures were on track for a weekly loss as interest rate uncertainty weighed.

Brent futures were up 50 cents, or 0.6%, at $81.60 a barrel by 11:30 a.m. EDT (1530 GMT). West Texas Intermediate crude (WTI) was up 49 cents, or 0.7%, at $77.87.

Brent was on track for a weekly loss of 5.5%, while WTI was set to fall 5.7%.

Both benchmarks had slid by more than 2% on Thursday – to their lowest since the unexpected announcement in early April of production cuts by some OPEC countries – on recession fears and swelling U.S. gasoline inventories.

"The market seems to be in a show-me mode," said Phil Flynn, an analyst at Price Futures Group, adding that prices continue to be in a range after the OPEC production cut.

Still, survey data from the euro zone and Britain lifted oil prices on Friday.

The euro zone economic recovery has unexpectedly gathered pace this month as the bloc's dominant services industry saw already-buoyant demand rise, more than offsetting a deepening downturn in manufacturing, surveys showed.

"It looks like the economy is rebounding from a feeble winter at the moment, but manufacturing weakness remains a concern and dampens the upturn," ING economics said in a note.

British businesses also reported a bounce in activity and the slowest input cost inflation in more than two years, an industry survey showed.

In India, refiners' crude oil processing stayed near record peaks in March, provisional government data showed, catering to solid seasonal demand in the world's third biggest oil consumer.

The prospect of tighter supply added further support, with analysts expecting draws from inventories from next month, owing to OPEC's reduced output targets and rising Chinese demand.

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

Oilfield services giant SLB beat Wall Street estimates for first-quarter profit, as elevated crude prices and tight supplies increased demand for its services.

However, economic uncertainty and the prospect of rising interest rates continued to hang over oil markets.

The U.S. Federal Reserve, the Bank of England and the European Central Bank are all expected to raise rates when they meet in the first week of May, seeking to tackle stubbornly high inflation.