NEW YORK (Reuters) - Oil prices inched up on Friday, ending the week higher after stronger-than-expected U.S. economic data brightened the crude demand outlook and concerns over the safety of oil transport around the Strait of Hormuz threatened supply.
Brent crude futures LCOc1 settled at $63.46 a barrel, up 7 cents. They clocked a weekly rise of about 1.7%.
U.S. West Texas Intermediate crude CLc1 settled at $56.20 a barrel, rising 18 cents. It gained about 1.2% on the week.
U.S. economic growth slowed less than expected in the second quarter with a boom in consumer spending, strengthening the outlook for oil consumption.
“The data was net positive,” said John Kilduff, partner at Again Capital Management. “GDP beat expectations... consumer spending was just off the charts, but business spending was nearly as bad as consumer spending was good.”
Broader economic slowing, particularly in Asia and Europe, could weaken crude demand outside of the United States and kept prices in check.
“There’s a battle in the market right now between those who think we’re going to see slowing economic conditions that will hit demand... and others (focused on) what’s going on in the Persian Gulf as well as lowered output from the producers,” said Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut.
Next week, top U.S. and Chinese negotiators meet for the first time since trade discussions between the world’s two largest economies broke down in May after nearing agreement. Any positive outcome from the talks 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.
(GRAPHIC - Reuters Poll: 2019 economic growth forecast revisions: tmsnrt.rs/2y9gT2M)
A rally in equities .SPX and drop in production from Mexican state oil company Pemex also helped push oil prices up, said Josh Graves, senior commodities strategist at RJO Futures in Chicago.
“Pemex, Mexico’s largest oil company, coming out and cutting off some of the supply could have given the market a bit of a jolt here,” Graves said.
Energy firms this week also reduced the number of oil rigs operating in the United States, an indication of future supply, for a fourth week in a row, putting the rig count down for an eighth consecutive month, General Electric Co's GE.N Baker Hughes energy services firm said in a report.
Tensions remained high around the Strait of Hormuz, the world’s most important oil passageway in between the Gulf and the Gulf of Oman, as Iran refused to release a British-flagged tanker it seized last week 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.
(GRAPHIC - Strait of Hormuz: tmsnrt.rs/2NVdJKG)
Additional reporting by Bozorgmehr Sharafedin in LONDON, Roslan Khasawneh in SINGAPORE and Aaron Sheldrick in TOKYO; Editing by Dale Hudson, Mark Potter, Raissa Kasolowsky, David Gregorio and Cynthia Osterman
Our Standards: The Thomson Reuters Trust Principles.