Oil retreats, contributing to a weekly loss as China data revive worries about demand

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Oil futures finished lower on Friday, giving up earlier gains to build a loss for the week, as data showing slower Chinese economic growth fed worries about weaker demand for oil and a recent report revealed a fifth consecutive weekly rise in U.S. crude inventories.

However, support tied to progress toward deals on U.S.-China trade and Brexit, as well as a weekly fall in U.S. petroleum-product inventories limited losses for prices.

China's National Bureau of Statistics released data Friday showing slower-than-expected growth by China's economy. Gross domestic product expanded at a 6% pace in the third quarter, the slowest in 27 years.

"This provides more evidence that the trade war is taking a toll on growth," said Fawad Razaqzada, technical analyst at Forex.com. Still, "the more up-to-date data showed industrial production rose a surprisingly large 5.8% [year-on-year] rise last month when expectations were for a smaller 5.0% increase."

"Industrial output has therefore grown at a faster pace for the first time in three months, but [it] remains to be seen whether this spike is just an outlier...or the start of something more profound," he said in a note.

West Texas Intermediate crude for November delivery fell by 15 cents, or 0.3%, to settle at $53.78 a barrel on the New York Mercantile Exchange, prompting the U.S. benchmark to post a 1.7% weekly decline, according to Dow Jones Market Data. The global benchmark, as measured by December Brent crude , lost 49 cents, or 0.8%, at $59.42 a barrel, off 1.8% for the week.

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For now, it appears that "oil prices have stabilized over the past couple of weeks," said Razaqzada. "During this period, we have also seen equity prices rise noticeably as a result of optimism over the US-China trade situation and Brexit." Front-month Brent oil futures trade roughly 2.2% lower month to date, but was up more than 10% for the year so far.

Prices posted gains on Thursday despite the Energy Information Administration reporting a larger-than-expected rise in crude stocks last week of 9.3 million barrels, though a fall in refinery activity led to a strong draw on gasoline and distillate inventories, which fell 2.6 million barrels and 3.8 million barrels, respectively.

Separately, data from Baker Hughes released Friday showed that the number of active U.S. rigs drilling for oil edged up for a second week in a row.

Razaqzada warned that "further sharp increases in crude stocks, if seen, may keep price gains [for oil] in check, although ongoing intervention from the OPEC+ group means the downside will be limited as well."

"So, overall, we are talking about a range-bound market, but with prices being near the range lows, the probability of a several-dollar rally has now increased," he said.

Prices got a boost late in Thursday's trading session after news that the U.S. and Turkey reached a case-fire pact in Syria, temporarily easing Middle East tensions. A tentative Brexit deal, meanwhile, fueled appetite for asset perceived as risky, though the deal must still be approved by the British parliament and other EU member states.

Back on Nymex, prices for petroleum products barely budged for the session, with November gasoline adding 0.03% to $1.623 a gallon, for a weekly loss of 1%, while November heating oil shed 0.05% to $1.9471 a gallon, down 0.5% for the week.

November natural gas edged up by nearly 0.1% at $2.32 per million British thermal units, tallying a weekly rise of 4.8%.

A storm in the Gulf of Mexico, dubbed potential tropical cyclone sixteen by the National Hurricane Center, was expected to bring tropical storm force winds along portions of the Northern Gulf Coast later Friday. The storm, for now, has no apparent impact on oil and natural-gas operations in the Gulf.