Oil prices fall; Brent still set for weekly gain

NEW YORK: Oil prices fell on Friday, weighed down by a drop in the U.S. equities market, but Brent was still set for a weekly increase, supported by easing trade tensions and a temporary shutdown by Saudi Arabia of a key crude oil shipping lane.

Brent crude futures fell 28 cents to $74.26 a barrel by 1:17 p.m. EDT (1717 GMT), but were on track for a 1.6 percent weekly increase.

U.S. West Texas Intermediate (WTI) crude futures fell 94 cents to $68.67 a barrel, and were set for a fourth week of declines, falling 2.6 percent.

Volume was light, with less than 361,000 U.S. crude contracts changing hands as of 1:19 p.m. EDT, compared with a 10-month daily average of about 587,000 contracts.

Depressing oil prices, U.S. stock markets broadly fell on Friday.

Crude futures at times track with equities.

"That could show some sign of a slowdown in the economy, which could in turn affect oil consumption," said Phillip Streible, senior market strategist at RJO Futures.

The oil market largely brushed off government data on Friday that said the U.S. economy grew in the second quarter at its fastest pace in nearly four years.

"It was a strong number that suggests strong energy demand into the end of the year," said Phil Flynn, analyst at Price Futures Group in Chicago. "The reason why we're not rallying off that is because it came in line with expectations, but when you're running that kind of a GDP, that's a lot of oil."

U.S. energy companies added three oil rigs in the week to July 27, the first time in the past three weeks that drillers have added rigs, General Electric Co's Baker Hughes energy services firm said on Friday.

Russian energy minister Alexander Novak said on Friday the market remained volatile and responded to verbal interventions, adding that the market had priced in risks related to U.S. sanctions against Iran.

He said the Organization of the Petroleum Exporting Countries and its allies were not discussing an option to boost production by more than 1 million barrels per day.

OPEC and other producers led by Russia agreed last month to ease production curbs. The deal effectively increases combined output by 1 million bpd, with Russia's share at 200,000 bpd.

Saudi Arabia earlier in the week said it was suspending oil shipments through the Red Sea's Bab al-Mandeb strait, one of the world's most important tanker routes, after Yemen's Iran-aligned Houthis attacked two ships in the waterway.

Any move to block the strait would virtually halt oil shipments through Egypt's Suez Canal and the SUMED crude pipeline linking the Red Sea and Mediterranean.

An estimated 4.8 million bpd of crude oil and refined products flowed through the Bab al-Mandeb strait in 2016 toward Europe, the United States and Asia, according to the U.S. Energy Information Administration.

A breakthrough in U.S.-EU trade talks also lent support to oil prices this week. U.S. President Donald Trump and Jean-Claude Juncker, president of the European Commission, reached a surprise agreement on Wednesday that alleviated the risk of an immediate trade war.