prices slipped on Friday in tug-of-war trading after an initial
estimate of U.S. first-quarter economic growth lagged
expectations, but losses were limited by hopes for additional
easing by the Federal Reserve to boost sputtering U.S.
In extremely light trading,
recovered and edged up late in the open outcry session, helped by
a revised higher February oil demand number from the Energy
Information Administration (
), traders and broker said.
Both Brent and U.S. crude headed for a small weekly gain and
traded in relatively narrow ranges as the dollar's weakness and a
rise in U.S. consumer sentiment also provided support.
Oil fell after ratings agency S&P downgraded Spain's
credit rating, but pared losses ahead of the U.S. GDP
Some investors believe slowing U.S. growth may prompt the
Federal Reserve to launch a third round of government bond
buying, or quantitative easing, known on Wall Street as QE3.
"Bad news for the economy is being interpreted as good news
for commodities because it may put QE3 back on the table," said
Dominick Chirichella, senior partner at Energy Management
Institute in New York. "Whether or not that trade has any
longevity is not clear."
The dollar slumped to multi-week lows against the euro and yen
as the slowing U.S. growth raised the possibility of more
stimulus from the central bank. A weaker U.S. currency can be
supportive to dollar-denominated oil by making it less expensive
to consumers using other
Brent June crude was down only 15 cents to $119.77 a barrel at
2:10 p.m. EDT (1810 GMT), having traded in a range of $119.06 to
$119.95. Brent was on track for a nearly 1 percent weekly gain
but a more than 2 percent loss for the month.
U.S. June crude rose 31 cents to $104.86, having reached
$104.90, ahead of the 50-day moving average of $105.10. It was on
pace for a 1 percent weekly rise and a similar monthly gain.
Brent's premium to its U.S. counterpart narrowed back below
$15 a barrel, after reaching $15.64 intraday.
Total crude trading volumes were very light, with U.S.
turnover 59 percent below its 30-day average. Brent dealings,
while outpacing turnover for U.S. contracts, were 27 percent
below the 30-day average.
The Chicago Board Options Exchanges Oil Volatility Index .OVX
fell to a record low below 25 intraday. The index is a measure of
implied volatility and a low reading is an indication of a low
risk perception in the markets.
U.S. RBOB gasoline
edged up in choppy trading, while heating oil dipped, as
front-month May contracts approach expiration on Monday.
U.S. GROWTH SLOWS IN Q1
U.S. economic growth cooled in the first quarter to a 2.2
percent annual rate, the government said in its advanced
estimate, moderating from the fourth quarter's 3.0 percent.
Expectations were for growth between 2.3-2.5 percent, with the
consensus forecast at the upper end of that range.
The Federal Reserve reiterated its intent to keep interest
rates low and Fed chief Ben Bernanke said the central bank stood
ready to move to support the economy if it faltered.
U.S. consumer sentiment inched up in April from March in the
Thomson Reuters/University of Michigan's final reading for the
month, the better than expected rise put the index at its highest
since February 2011.
IRAN AND SUPPLY DISRUPTIONS
The EIA said global oil supply exceeded demand by 500,000
barrels per day over the last two months as Saudi Arabia lifted
output, more than countering rising non-OPEC outages. The report
is required every 60 days by the
sanctions law enacted in December.
This month's revived talks involving Iran and major powers
about Tehran's disputed nuclear program eased the geopolitical
fear premium in oil prices, but traders and analysts remain
skeptical the talks will succeed.
Disrupted production in the North Sea,
and Sudan and turmoil in OPEC-member Nigeria have supported oil
prices even as signs of slowing global economic growth,
lackluster U.S. demand and rising stockpiles pulled crude prices
off 2012 peaks reached in the first quarter.
(Additional reporting by
in New York,
in London and Luke Pachymuthu in Singapore; Editing by