By Barani Krishnan
Investing.com - Oil bulls must have said "Thank God It's (Jobs) Friday!".
Yet, that wasn't enough to save crude futures from posting their second straight weekly loss.
Oil markets managed to rebound on Friday from the previous day's dismal performance triggered by a shocking U.S. crude stockpile build.
U.S. West Texas Intermediate crude futures settled 13 cents higher at $61.94 per barrel, after sinking 2.8% on Thursday, after the April U.S. employment report bested expectations, lifting Wall Street's main indexes and appetite across risk assets, including commodities.
WTI tumbled nearly 3% in the previous session, when it briefly sank beneath $61, its lowest level since April 1.
The U.S. crude benchmark finished the present week down 2.1%.
London Brent futures, the global benchmark for oil, settled up 10 cents, or 0.14%, at $70.85, recovering some ground after Thursday's 2% slide. For the week. Brent lost 1.1% after a small gain a week earlier.
For the year, WTI remains up 36% while Brent's gain is about 32%. Retail gasoline prices are still rising, with the national average price of gasoline at $2.895 a gallon. That was up from Thursday's $2.888 and up 1.7% for the week and 27.8% this year, according to the American Automobile Association.
Oil was also supported by the weekly reading on U.S. oil rigs, which rose just slightly, after U.S oil production as a whole was estimated earlier this week at a record high of 12.3 million barrels per day.
Oil services firm Baker Hughes gave market bulls a sentiment boost last week by reporting a 20-rig drop for oil drilling in its weekly activity survey, sending the data to 13-month lows. For this week, it reported a rise of two oil rigs.
The disconnect between drilling data and production estimates by the U.S. Energy Information Administration has sent mixed signals to the trade, trapping crude prices in a range after six-month-highs above $65 for WTI and $75 for Brent last week.
Thursday's 3% tumble came after the EIA shocked the market by reporting a weekly build of nearly 10 million barrels that brought the gains to almost 30 million in the past five weeks. That, and the EIA's record output estimate, has cast serious doubts on a crude rally that just a week ago seemed unstoppable.
"Even with deep losses in supply from Iran and Venezuela, as well as a few other countries around the world, OPEC+ will still need to hold back production to balance the market," SEB analyst Bjarne Schieldrop said in a note.
Production from Saudi Arabia could edge higher in June to meet domestic demand for power generation, though output will remain within its quota in the supply pact, sources familiar with the kingdom's policy told Reuters.
The world's top crude exporter is expected to produce about 10 million bpd in May, slightly higher than in April, but still below its 10.3 million bpd quota under the OPEC-led deal, the sources said.
Another negative was Russia's ability to clean up contamination in its Druzhba oil pipeline and resume exports to western Europe within days versus the weeks many had anticipated.
Analysts said hedge funds were particularly cautious of adding to a market that increasingly looks like it has gotten ahead of itself and could snap back anytime on bearish data.
"Some of the components of energy remain very strong, with gasoline spreads nearly parabolic and U.S. heating oil spreads also being taken for the ride," said Scott Shelton, energy futures broker at ICAP (LON:NXGN) in Durham, N.C. Wholesale gasoline to be delivered in June is trading at about $2.03 a gallon. The price for gasoline delivered in March is $1.725, a difference of about 30 cents a gallon.
"The market simply has very little shorts that can cover" in the event things go wrong, Shelton added.