Oil set to end week lower on demand concerns, easing supply woes

Oil prices were steady in early Asian trading on Friday, but were poised to end the week lower as downward revisions to U.S. employment data raised demand concerns and ceasefire talks in Gaza eased worries about supply disruptions.

Brent crude futures were down a cent to $77.21 per barrel by 0033 GMT. U.S. West Texas Intermediate (WTI) crude futures were up 4 cents to $73.05 per barrel.

Both benchmarks rose for the first time in five sessions on Thursday on expectations the U.S. Federal Reserve would cut interest rates soon, which helped ease some concerns about the economic outlook of the top oil consumer.

Minutes of the Federal Reserve’s July meeting released on Wednesday showed most Fed officials thought the central bank was on track for an interest rate cut next month.

Still, Brent futures were set to post a weekly decline of about 3%, while WTI was on course to shed nearly 5%. Both benchmarks had hit their lowest since early January earlier in the week, after the U.S. government revised sharply lower its estimate of jobs added by employers in the country this year through March. That sparked concerns about a potential recession in the U.S. hurting demand in the top oil consuming nation. Recent data from China, the top oil importer, has also pointed to a struggling economy and slowing oil demand from refiners there.

“Bullish fundamentals continue to play second fiddle to weakening sentiment, with the oil market unable to shake off its recent bearish tendencies,” analysts at consultancy firm FGE said in a note to clients.

They added that a renewed push for a ceasefire in Gaza between Israel and Hamas helped to ease supply worries and in turn weighed on oil prices this week.

U.S. and Israeli delegations started a new round of meetings in Cairo on Thursday to resolve differences over a truce proposal.

Some analysts say there are signs that oil could find support in the weeks ahead. Global oil inventories have declined over the past two months, indicating supply growth is lagging demand, UBS analysts said on Thursday.

That should help prices recover over the coming months, pushing Brent crude back into the $85 to $90 range, they said.