* Iran dismisses report U.S. Navy downed "provocative" drone
* IEA does not expect "huge increase" in crude prices
(Adds CFTC data)
By Stephanie Kelly and Devika Krishna Kumar
NEW YORK, July 19 (Reuters) - Oil prices rose about 1
percent on Friday after steep losses a day earlier, supported by
rising tensions between the United States and Iran, even as
concerns that slowing economic growth could dent global oil
demand cast a cloud.
For the week, benchmark crude prices declined, having fallen
sharply earlier in the week on demand worries.
Brent crude LCOc1 futures settled 54 cents higher at
$62.47 a barrel. West Texas Intermediate crude CLc1 futures
rose 33 cents to end the session at $55.63 a barrel.
Still, WTI dropped 7% for the week and Brent lost about 5.5%
for the week, the steepest losses for both benchmarks since late
May.
Prices gained late in the session after Iran's Revolutionary
Guards said they had captured a British-flagged oil tanker in
the Gulf after Britain seized an Iranian vessel earlier this
month, further raising tensions along a vital international oil
shipping route. A second oil tanker, the British-operated, Liberian-flagged
Mesdar, turned sharply north toward Iran's coast on Friday
afternoon after passing westward through the Strait of Hormuz
into the Gulf, according to Refinitiv tracking data.
"Our opinion of the complex still favors some wide swinging
trade in both directions as pricing continues to be buffeted by
an array of cross currents that include a heightening of
tensions between the U.S. and Iran on the bullish side and
mounting global oil demand concerns on the bearish side," Jim
Ritterbusch of Ritterbusch and Associates said in a note.
The episode has injected further geopolitical risk into the
oil market.
A senior Trump administration official said on Friday the
United States will destroy any Iranian drones that fly too close
to its ships. A day earlier, the United States said a U.S. Navy ship had
"destroyed" an Iranian drone in the Strait of Hormuz after the
aircraft threatened the vessel, but Iran said it had no
information about losing a drone.
Prices were also buoyed Friday by indications the U.S.
Federal Reserve will interest cut rates aggressively to support
the economy.
Two influential Federal Reserve officials sharpened the
public case for acting to support the U.S. economy on Thursday,
reviving bets the central bank may deliver a
larger-than-expected cut this month, although bets on a larger
rate cut were pared back on Friday. Meanwhile, U.S. energy firms this week reduced the number of
oil rigs operating for a third week in a row as drillers follow
through on plans to cut spending.
Drillers cut five oil rigs in the week to July 19, bringing
the total count down to 779, the lowest since February 2018,
General Electric Co's GE.N Baker Hughes energy services firm
said in its closely followed report on Friday. RIG-OL-USA-BHI
Data on Friday also showed hedge funds and other money
managers raised their bullish wagers on U.S. crude. It was the
second consecutive increase. CFTC/
Still, the longer-term outlook for oil has grown
increasingly bearish.
The International Energy Agency (IEA) does not expect oil
prices to rise significantly because demand is slowing and there
is a glut in global crude markets, the IEA's Fatih Birol said on
Friday in public comments. The IEA is reducing its 2019 oil demand growth forecast to
1.1 million barrels per day (bpd) from 1.2 million bpd due to a
slowing global economy amid a U.S.-China trade spat, Birol told
Reuters in an interview on Thursday. "Macroeconomic concerns, uncertainty on trade discussions
and increasing oil supply from the U.S. continued to weigh on
sentiment," said Warren Patterson, head of commodities at ING.
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TECHNICALS: U.S. oil may bounce more to $56.98 L4N24K0NU
TECHNICALS: Brent oil may bounce to $63.84 L4N24K0C4
MAP: Iran's guards say they seized a foreign oil tanker in the
Gulf https://tmsnrt.rs/32tzK6J
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