Oil down 2 percent amid global economy concerns but set for weekly gain

By Laila Kearney

NEW YORK (Reuters) - Oil prices fell about 2 percent on Friday amid worries about a global economic slowdown, but futures were set to end the week higher, keeping some gains from a week-long rally spurred by U.S.-China trade hopes.

Brent crude futures fell $1.15, or 1.9 percent, to $60.53 a barrel by 1:08 p.m. EST (1808 GMT). U.S. West Texas Intermediate (WTI) crude futures were down 91 cents, or 1.7 percent, at $51.68 a barrel.

Both benchmarks were set for their second week of gains, with Brent rising about 6 percent and WTI up nearly 8 percent.

Markets were supported earlier this week by hopes that an all-out trade war between Washington and Beijing might be averted. Three days of talks concluded on Wednesday with no concrete announcements, but higher-level discussions may convene later this month.

"Some of the strength that we've gotten from that seems to be coming out of the market," Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut.

"Right now I think the market is in a holding pattern above our recent lows and it's looking for its next driver," McGillian said.

Investors remained concerned about a slew of recent economic data that has raised worries about a global economic slowdown.

China plans to set a lower economic growth target of 6-6.5 percent in 2019 compared with last year's target of "around" 6.5 percent, policy sources told Reuters, as Beijing gears up to cope with higher U.S. tariffs and weakening domestic demand.

"If we experience an economic slowdown, crude will underperform due to its correlation to growth," said Hue Frame, portfolio manager at Frame Funds in Sydney.

On the supply side, oil markets have received support from supply cuts led by the Organization of the Petroleum Exporting Countries. The deal is aimed at reining in a glut that emerged in the second half of 2018.

Lower oil exports from Iran since November, when U.S. resumed sanctions against the OPEC producer, have also supported crude.

Playing a key part in the emerging glut was the United States, where crude oil production has soared to a record 11.7 million barrels per day.

Consultancy JBC Energy this week said it was likely that U.S. crude production was "significantly above 12 million bpd" by this month.

U.S. energy firms, however, this week cut four oil rigs, the second week of declines, General Electric Co's Baker Hughes energy services firm said, as producers turned conservative in their 2019 drilling plans due to uncertainty over a recovery in crude prices. [RIG/U]

(Additional reporting by Noah Browning in London, Henning Gloystein in Singapore, Stephanie Kelly and Scott DiSavino in New York; Editing by Marguerita Choy and Alexander Smith)