London — Oil prices steadied on Friday and were on track for a weekly increase as geopolitical tensions in the Middle East and concerns over the safety of oil transport in the Gulf countered slowing U.S. economic growth amid a U.S.-China trade war.
Brent crude futures were up 9 cents at $63.48 per barrel at 1331 GMT, equivalent to a weekly rise of 1.6%. They fell 6% last week.
U.S. West Texas Intermediate crude was 12 cents higher at $56.14 a barrel, a weekly gain of almost 1%. It fell 7.5% last week.
U.S. economic growth slowed less than expected in the second quarter as a surge in consumer spending blunted some of the drag from declining exports and a smaller inventory build.
The fairly upbeat report from the Commerce Department will probably not deter the Federal Reserve from cutting interest rates next Wednesday for the first time in a decade, given rising risks to the economy’s outlook.
“Several indicators pointing to a slowdown of global oil demand growth appear to have taken over market sentiment,” Jefferies analyst Jason Gammel said.
Trade talks between the United States and China broke down in May after nearing agreement. Next week, top U.S. and Chinese negotiators meet for the first time since then. Any positive outcome from the meeting is expected to boost oil prices.
Reuters polls taken July 1-24 showed the growth outlook for nearly 90% of the more than 45 economies surveyed was downgraded or left unchanged. That applied not just to this year but also 2020.
Tensions remained high around the Strait of Hormuz, the world’s most important oil passageway, as Iran refused to release a British-flagged tanker it seized last week in the Gulf but granted India consular access to its 18 Indian crew members.
Denmark welcomed the British government’s proposal for a European-led naval mission to ensure safe shipping through the strait.
The United States is separately working on a multinational maritime security initiative in the Gulf.
However, oil prices’ reaction to the strains in the Gulf has been relatively muted. “It appears that the majority of market participants do not expect a military conflict that would hamper oil shipments,” Commerzbank analyst Carsten Fritsch said.
Prices also drew support from a crude inventory draw in the United States, but gains were limited as the fall appeared to have been largely anticipated. U.S. production in the Gulf of Mexico was still feeling the effects of Hurricane Barry.