Picture: REUTERS
Picture: REUTERS

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 US stocks, a looming hurricane in Florida and an easing of China-US trade rhetoric.

Brent crude was down by 15c, or 0.25%, at $60.93 a barrel, by 9.35am GMT, but was heading for a gain of more than 2% for the week. US West Texas Intermediate (WTI) crude futures fell 56c, 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 US-China trade saga”, said Stephen Brennock of oil broker PVM.

On Thursday, the US 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 Rücker of Swiss bank Julius Bär. “Both growth and oil demand are set to remain lacklustre and thus supplies look ample well into 2020.”

The approach of Hurricane Dorian towards Florida earlier 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 towards 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 Centre said.

Chevron’s 356,440 barrel-per-day (bpd) Pascagoula, Mississippi, oil refinery is closely monitoring the progress of Hurricane Dorian, a company spokesperson said on Thursday.

Last month, Hurricane Barry prompted offshore oil companies to shut as much as 74% of production, lifting US crude prices, before it weakened to a tropical storm.

Government data on Wednesday showed US crude stocks dropped last week by 10-million barrels to their lowest since October as imports slowed, while petrol and distillate stocks each fell by more than 2-million barrels.

But the Energy Information Administration (EIA)  data also showed that US production rebounded to a weekly record of 12.5-million bpd, suggesting there is still plenty of supply available.