Losses in early Friday trading reversed after surveys showed that the euro zone economic recovery gathered pace this month. Demand rose in the bloc's dominant services sector, more than offsetting a deepening downturn in manufacturing. "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 on Friday. 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 on Friday, 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.
"At the core of the current bout of price malaise are concerns that rising interest rates could hit economic growth," said Stephen Brennock of oil broker PVM. 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. Meanwhile, data on Thursday showed U.S. weekly jobless claims rose last week, raising fears of a recession and of lower fuel demand from the world's biggest oil consumer. (Reporting by Rowena Edwards in London; Additional reporting by Yuka Obayashi and Jeslyn Lerh in Singapore; Editing by David Goodman and Alexander Smith)
