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A worker at an oilfield in Russia. Oil rose more than 2 per cent in volatile trading on Friday, but finished the week about 7 per cent lower. Image Credit: Reuters

New York: Oil rose more than 2 per cent in volatile trading on Friday, but finished the week about 7 per cent lower as a new wave of coronavirus infections across Europe dampened hopes that fuel demand would recover soon.

Brent crude settled up $1.25 a barrel, or 2 per cent, at $64.53 a barrel. West Texas Intermediate (WTI) U.S. crude rose $1.42, or 2.4 per cent, to $61.42. During the session, both traded within a wide range of more than $2 a barrel. The weekly loss for both benchmarks was just under 7 per cent.

On Thursday, oil slid 7 per cent as large European economies reimposed lockdowns, while vaccination programs there were slowed by distribution issues and fears of side effects.

Prices rose on Friday as many market players viewed the sell-off as overdone.

"The sell-off is going to put into motion some things that could have slowed the rally," said Phil Flynn, senior analyst at Price Futures Group in Chicago. "OPEC is going to be more concerned about COVID, so this increases the odds that they will extend production cuts yet again, and with the sharp drop in the price of oil, it might reduce the incentive of the U.S. shale producers to get ahead of their skis." U.S. shale production has swelled global oil supplies as fuel demand cratered during the pandemic. U.S. drillers added nine oil rigs in this week, the biggest weekly increase since January, oil services firm Baker Hughes said.

Concerns about vaccine rollouts capped oil's gains.

Germany, France and other countries have announced resumption of inoculations with the AstraZeneca shot after regulators declared that vaccine safe. But the earlier halt has made it harder to overcome resistance to vaccines.

Britain announced it would have to slow its COVID-19 vaccine rollout next month because of a supply delay.

Goldman Sachs said oil market headwinds related to European Union demand and Iran supply would slow market rebalancing in the second quarter, though it expects the Organization of the Petroleum Exporting Countries and allies to act to offset that.

Iran has moved record amounts of crude oil to top client China in recent months while India's state refiners have added Iranian oil to their annual import plans on the assumption that U.S. sanctions on the OPEC supplier will soon ease.

Goldman expects a significant increase in global oil demand in the coming months, lifting its Brent price forecast to $80 a barrel this summer.

Hedge funds and other money managers raised their net long U.S. crude futures and options positions in the latest week, the U.S. Commodity Futures Trading Commission (CFTC) said.