July 5, 2019 / 1:51 AM / 14 days ago

Oil prices rise on Iran tensions, OPEC output cuts

NEW YORK (Reuters) - Oil futures rose on Friday as tensions over Iran and an extension to output cuts by OPEC and its allies boosted prices, but mixed economic data limited the rally.

FILE PHOTO: A British Royal Navy patrol vessel guards the oil supertanker Grace 1, that's on suspicion of carrying Iranian crude oil to Syria, as it sits anchored in waters of the British overseas territory of Gibraltar, historically claimed by Spain, July 4, 2019. REUTERS/Jon Nazca/File Photo

Brent crude futures LCOc1 settled at $64.23 a barrel, up 93 cents, or 1.47%. U.S. West Texas Intermediate (WTI) CLc1 settled at $57.51 a barrel, up 17 cents. The U.S. market was closed on Thursday for a national holiday.

Both benchmarks were down for the week as concerns about a slowing global economy outweighed risks to supply. Brent recorded a 3.3% weekly loss and WTI shed roughly 1.8%.

The U.S.-China trade war has dampened prospects of global economic growth and oil demand, but talks resume next week in a bid to resolve the deadlock.

“The complex is maintaining a heavy feel that was set into motion earlier this week by mounting expectations of a global economic slowdown that will be impacting oil demand,” Jim Ritterbusch of Ritterbusch and Associates said in a note.

German industrial orders fell far more than expected in May, and the Economy Ministry said this sector of Europe’s largest economy was likely to remain weak in coming months.

The U.S. Labor Department said nonfarm employers added 224,000 jobs last month, the most in five months. However, new orders for U.S. factory goods fell for a second straight month in May, government data showed, stoking economic concerns.

The U.S. Energy Information Administration reported on Wednesday a weekly decline of 1.1 million barrels in crude stocks, smaller than the 5 million barrel draw reported by the American Petroleum Institute and less than analysts had forecast. USOILC=ECI

The Organization of the Petroleum Exporting Countries and allied producers such as Russia, known as OPEC+, supported prices by extending their deal on supply cuts.

Tension in the Middle East also offered support, particularly to Brent. “Brent is pricing in more of the geopolitical risk than WTI,” said Phil Flynn, an analyst at Price Futures Group in Chicago.

Iran threatened to capture a British ship after British forces seized an Iranian tanker in Gibraltar over accusations the ship was violating EU sanctions on Syria. [nL8N2461KI]

“If Britain does not release the Iranian oil tanker, it is the authorities’ duty to seize a British oil tanker,” a Revolutionary Guards Commander wrote on Twitter.

A Reuters survey found OPEC oil output sank to a new five-year low in June, as a rise in Saudi supply did not offset losses in Iran and Venezuela due to U.S. sanctions and other outages elsewhere in the group.

Additional reporting by Shadia Nasralla and Bozorgmehr Sharafedin in London, Colin Packham in Sydney; Editing by Edmund Blair, Chris Reese and David Gregorio

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