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Oil nudges lower but set for weekly gain on demand recovery hopes

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Laura Sanicola
·2 min read
FILE PHOTO: Dust blows around a crude oil pump jack and flare burning excess gas at a drill pad in the Permian Basin in Loving County
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By Laura Sanicola

NEW YORK (Reuters) - Oil was modestly lower on Friday but headed for a weekly gain as a stronger demand outlook and signs of economic recovery in China and the United States offset concerns about rising COVID-19 infections in other major economies.

Brent crude was down 23 cents, or 0.3%, at $66.71 a barrel by 11:27 a.m. EDT (1537 GMT). The global benchmark was on track for a weekly gain of 6% after rising in the past four sessions.

U.S. West Texas Intermediate (WTI) crude fell 39 cents, or 0.6%, to $63.07.

China's first-quarter gross domestic product jumped 18.3% year on year, official data showed. That followed a big increase in U.S. retail sales and a drop in unemployment claims released Thursday.

"The economic data this week has been incredibly strong, but there's still some nervousness about COVID outbreaks affecting the demand outlook," said John Kilduff, partner at Again Capital LLC in New York.

This week, both the International Energy Agency and the Organization of the Petroleum Exporting Countries increased their forecasts for oil demand growth for 2021, citing the stronger-than-expected rebound in activity in certain economies.

Those forecasts were also supported by Wednesday's government data that showed overall U.S. crude inventories fell by 5.9 million barrels as refining activity picked up.

Not all economies are recovering, however, as India's infection rate hit a record while Germany's chancellor on Friday said a third wave of the virus had the country in its grip.

Oil has recovered from pandemic-induced lows last year, helped by record cuts to oil output by OPEC and its allies, a group known as OPEC+.

Some of the OPEC+ cuts will be eased from May and the group meets on April 28 to consider further tweaks to the supply pact.

In rival producer the United States, however, the number of drilling rigs has been on the rise since hitting a record low in August. Latest weekly rig data from energy services firm Baker Hughes is due after 1 p.m. EDT.

(Additional reporting by Alex Lawler in London, Sonali Paul in Melbourne and Roslan Khasawneh in Singapore. Editing by Marguerita Choy and Mark Potter)