Oil prices steady, set for weekly gain ahead of G20 talks, OPEC

Oil prices were steady on Friday and on track for a second straight week of gains, ahead of talks over the trade dispute between the U.S. and Chinese presidents this weekend and on production cuts from OPEC on Monday.

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Brent crude futures were up 16 cents at $66.71 a barrel by 11:51 a.m. ET (1551 GMT). U.S. West Texas Intermediate (WTI) crude futures were down 12 cents at $59.31 a barrel. The most active September Brent crude futures was down 9 cents at $65.58 a barrel.

Brent was on course for a gain of around 25 percent in the first half of 2019 and WTI for a 30 percent gain. Both contracts were also set to notch their second straight weekly gain.

The leaders of the G20 countries meet on Friday and Saturday in Osaka, Japan, but the most anticipated meeting is between U.S. President Donald Trump and Chinese President Xi Jinping on Saturday.

A trade war between the world's two biggest economies has weighed on prices, fanning fears that slowing economic growth could dent demand for oil.

Trump said on Wednesday a trade deal with Chinese President Xi was possible this weekend but he is prepared to impose U.S. tariffs on most remaining Chinese imports should the two countries disagree.

"Since we don't anticipate significant progress out of tomorrow's Trump-Xi discussions, we are not ruling out some reduction in risk appetite next week with U.S. equities relinquishing a sizable portion of this week's gains," Jim Ritterbusch of Ritterbusch and Associates said in a note.

"Furthermore, we are not looking for any surprises out of the Monday-Tuesday OPEC+ meeting as a simple rollover of the existing agreement through the rest of this year would appear to be the most probable outcome."

The Organization of the Petroleum Exporting Countries and some non-members including Russia, known as OPEC+, will hold meetings on July 1-2 in Vienna to decide whether to extend their supply cuts.

"The market sentiment is that OPEC+ will agree to extend cuts, but after all what matters is how deep the cuts will be and how much Saudi Arabia and Russia will curb," said Kim Kwang-rae, a commodity analyst at Samsung Futures in Seoul.

OPEC+ members agreed to curb oil output by 1.2 million barrels per day from Jan. 1.

Oil prices could stall as a slowing global economy squeezes demand and U.S. crude floods the market, a Reuters poll of analysts found, despite an expected extension by OPEC and its allies of their output-cutting pact.

The survey of 42 economists and analysts forecast Brent crude would average $67.59 a barrel in 2019, down from the $68.84 estimate in May.

Tensions between the United Sates and Iran have also been keeping markets on edge.

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week after Trump called off air strikes on Iran at the last minute, the prospect that Tehran could soon violate its nuclear commitments has created additional diplomatic urgency to find a way out of the crisis.

Record U.S. crude production has capped oil prices even as the rig count, an early indicator of future output, has declined over the past six months as independent exploration and production companies cut spending on new drilling as they focus more on earnings growth instead of increased output.

(Reporting by Dmitry Zhdannikov in London and Jane Chung; Editing by Marguerita Choy and David Evans)