By Peter Nurse
Investing.com -- Oil prices traded higher Friday, boosted by signs of strength in the eurozone economy, but are on course for the first weekly loss since last month’s banking crisis.
By 09:30 ET (13:30 GMT), U.S. crude futures traded 1.1% higher at $78.22 a barrel, while the Brent contract rose 1% to $81.89 a barrel.
The crude market received a boost after data released earlier Friday showed that the eurozone economic recovery gathered pace this month, with growth in the region’s dominant services industry more than offsetting a deepening slump in manufacturing.
S&P Global’s flash Composite Purchasing Managers' Index jumped to an 11-month high of 54.4 in April from March's 53.7, well above the 50 mark separating growth from contraction.
However, both benchmarks are still heading for their first weekly loss, of around 6%, since the banking turmoil in March raised concerns about the health of the U.S. economy, giving up most of the gains put on after OPEC+ surprised the markets with another pledge to cut production.
Data released Thursday showed that continuing unemployment benefit claims in the U.S. jumped to the highest level since November 2021, pointing to a softening labor market and adding to concerns about the overall economic health of the largest economy in the world.
Yet, despite these economic worries, commentary from a number of Fed policymakers this week has pointed to the U.S. central bank raising interest rates once more in early May, potentially lifting the dollar.
A strengthening greenback makes oil, which is denominated in dollars, more expensive for holders of other currencies.
Data from the Energy Information Administration showed that U.S. crude inventories fell by 4.58 million barrels last week, but weaker gasoline demand helped lead to the 1.3M barrels build seen in U.S. gasoline inventories over the week.
The U.S. could begin to refill its Strategic Petroleum Reserve as soon as the third quarter of 2023 if prices are favorable, according to a U.S. official, with the administration aiming to sell 26M barrels by the end of June.
Data on the number of workable oil rigs in the U.S. from Baker Hughes and CFTC crude positioning numbers are due later in the session, as usual.