* US says close to finalizing parts of U.S.-China trade deal
-CNBC
* U.S. crude stocks fell unexpectedly last week
* OPEC and allies consider deeper oil cuts
* Weak economic outlook drags on prices
* Coming up: Weekly U.S. rig count data expected at 1 p.m.
EDT.
(New throughout; updates prices, market activity and comments;
changes byline and dateline from LONDON)
By Laila Kearney
NEW YORK, Oct 25 (Reuters) - Oil prices were steady on
Friday but were on track for the strongest weekly gains in more
than a month as support from falling U.S. crude inventories,
optimism over a U.S.-China trade deal and possible action from
OPEC and its allies to extend output cuts outweighed broader
economic concerns.
Brent crude LCOc1 was down 2 cents at $61.65 by 12:17 p.m.
EDT (1617 GMT) but the global benchmark was set for a weekly
gain of almost 4%. West Texas Intermediate (WTI) crude CLc1
was up 16 cents at $56.39 and on track for a gain of nearly 5%
over the week.
The strong weekly performance was underpinned by the
surprise drop in U.S. inventories, with crude stocks dropping by
about 1.7 million barrels last week. EIA/S
"We're holding our ground after a pretty good up week with
the surprise draw in inventories this week," said Phil Flynn,
senior energy analyst at Price Futures Group in Chicago.
Oil also got a boost this week from signs of progress in
talks on resolving the U.S.-China trade dispute that has weighed
on crude demand. CNBC reported on Friday that the United States
and China were close to finalizing the first part of a trade
deal after months of a tariff war. "That's given us optimism in the crude market that there's
going to be some pretty strong demand," Flynn said.
Yet concerns over weakening economic growth continued to
drag on prices.
"Slowing global activity will see demand drop, so the
reality is that oil rallies will be limited," said Jeffrey
Halley, senior market analyst at OANDA.
"It won't take much too pull the rug out from under oil's
feet."
Economists in a Reuters poll said a steeper decline in
global economic growth remains more likely than a synchronised
recovery, even as multiple central banks dole out rounds of
monetary easing. Reuters poll of economists found the recent truce in
the U.S.-China trade war is not an economic turning point and
has done nothing to reduce the risk that the United States could
slip into recession in the next two years. Also providing further price support this week, officials at
the Organization of the Petroleum Exporting Countries said
extended supply curbs are an option to offset the weaker demand
outlook in 2020.
Saudi Arabia, OPEC's de facto leader, wants to focus first
on boosting adherence to the group's production-reduction pact
with Russia and other non-members, an alliance known as OPEC+,
before committing to more cuts, sources told Reuters. The
alliance in July renewed the pact to cut output by 1.2 million
barrels per day since Jan. 1, until March 2020. A shutdown since Oct. 16 of Britain's 150,000 bpd Buzzard
oilfield and a brief shutdown in the North Sea's Forties
Pipeline System also lent support. Sources told Reuters that
Buzzard would restart over the weekend. Data about the U.S. oil rig count, an indicator of future
supply, is expected at 1 p.m. EDT.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
GRAPHIC: Reuters Poll on growth forecast revisions from July
survey https://tmsnrt.rs/2qJgdkp
CHART: Brent oil may retest resistance at $61.85 U.S. petroleum inventories https://tmsnrt.rs/2XlX17b
CHART: U.S. oil may retest resistance at $56.56 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>