London — Oil gave back some of its recent gains on Friday, but was still headed for the biggest weekly increase since early July, boosted by a decline in U.S stocks, a looming hurricane in Florida and an easing of Sino-U.S. trade rhetoric.
Brent crude was down by 15 cents, or 0.25%, at $60.93 a barrel, by 0935 GMT, but was heading for a gain of more than 2% for the week.
U.S. West Texas Intermediate (WTI) crude futures fell 56 cents, or 0.99%, to $56.15 a barrel. The contract is set for a gain of nearly 4% 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 indicate 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 U.S. 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 lacklustre and thus supplies look ample well into 2020.”
The approach of Hurricane Dorian toward Florida earlier raised fears that offshore U.S. crude producers may suspend output if the storm passes into the Gulf of Mexico over the weekend.
Dorian is heading toward landfall on the Atlantic coast of Florida over the weekend and may enter into the eastern Gulf of Mexico next week. It is forecast to strengthen and become more powerful on Sunday, the National Hurricane Center said.
Chevron Corp’s 356,440 barrel-per-day Pascagoula, Mississippi, oil refinery is closely monitoring the progress of Hurricane Dorian, a company spokesman said on Thursday.
Last month, Hurricane Barry prompted offshore oil companies to shut as much as 74% of production, lifting U.S. crude prices, before it weakened to a tropical storm.
Government data on Wednesday showed U.S. 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 U.S. production rebounded to a weekly record of 12.5 million barrels per day, suggesting there is still plenty of supply available.