Oil prices set for weekly gains on renewed enthusiasm around US economy

Oil prices edged lower in early Asian trading on Friday, but the market’s benchmarks were set for a second consecutive weekly gain after upbeat U.S. economic data eased investor worries about a potential recession in the top oil consuming nation.

Brent crude futures fell 16 cents, or 0.2%, to $80.88 per barrel by 0024 GMT. U.S. West Texas Intermediate crude futures fell 23 cents, or 0.3%, to $77.93 a barrel.

Brent was set to advance 1.6% on a weekly basis, while WTI was on track for gains of about 1.5%.

Investors found renewed optimism around U.S. economic growth after a string of data releases this week.

On Thursday, a government report showed U.S. retail sales rose 1% last month, well above market forecasts for a 0.3% gain. Also on Thursday, data showed that fewer Americans filed new applications for unemployment benefits last week. “US economic data released this week has helped to temper fears of a sharp slowdown in the US economy,” analysts at energy consultancy FGE said. They noted that oil markets would now return their full focus to fundamentals and geopolitics, with markets anticipating retaliatory attacks from Iran against Israel over the killing of a Hamas leader in Tehran. A fresh round of negotiations began on Thursday to secure a ceasefire in the Gaza war, even as Israeli troops continued their assault on the Palestinian enclave.

The talks, which have been boycotted by Hamas, were extended and will resume in the Qatari capital Doha on Friday.

Keeping a lid on oil prices, demand signals from the U.S. and China have been shaky. U.S. crude inventories posted a surprise jump earlier this week, whereas Chinese refineries sharply lowered crude processing rates last month on tepid fuel demand.

The Organization of the Petroleum Exporting Countries (OPEC) on Monday pared its demand outlook for this year citing softer expectations for China.