Oil prices gave back some of their recent gains on Friday, but were still headed for the biggest weekly increase since early July, boosted by an easing of China-U.S. trade rhetoric, a decline in US stockpiles and a looming hurricane in Florida.
Brent crude LCOc1 was down 28 cents, or 0.46%, at $60.80 a barrel, by 1150 GMT, but was heading for a gain of more than 2% for the week.
US West Texas Intermediate (WTI) crude futures CLc1 fell 77 cents, or 1.36%, to $55.94 a barrel. The contract is set for a gain of over 3% this week.
Worries about a slowdown in economic growth and the impact on oil demand due to the trade war between the world’s two biggest oil consumers kept a lid on price gains this week, even as falling inventories indicated a balancing market.
“Upside momentum should not be taken for granted. Recession fears are casting a shadow on sentiment and oil prices should keep dancing to the tune of the U.S.-China trade saga”, said Stephen Brennock of oil broker PVM.
On Thursday, the United States and China gave signs that they will resume trade talks, discussing the next round of in-person negotiations in September ahead of a looming deadline for additional US tariffs.
“The calm is somewhat deceptive as financial markets are still making up their mind on the question of slowdown or downturn,” said Norbert Ruecker of Swiss bank Julius Baer.
“Both growth and oil demand are set to remain lackluster and thus supplies look ample well into 2020.”
Analysts polled by Reuters slashed their price forecasts for Brent to an average of $65.02 in 2019 - the lowest in more than 16 months - citing softening global demand brought on by an economic slowdown and the trade row.
The approach of Hurricane Dorian toward Florida raised fears that offshore US crude producers may suspend output if the storm passes into the Gulf of Mexico over the weekend.
Dorian is heading for landfall on the Atlantic coast of Florida at the weekend and may enter the eastern Gulf of Mexico next week. It is forecast to strengthen and become more powerful on Sunday, the National Hurricane Center said.
Government data on Wednesday showed US crude stocks dropped last week by 10 million barrels to their lowest since October as imports slowed, while gasoline and distillate stocks each fell by over 2 million barrels.
But the EIA data also showed that US production rebounded to a weekly record of 12.5 million barrels per day, suggesting there is still plenty of supply available.