Oil prices fell nearly 2 per cent on Friday but were on track for weekly gains after financial markets strengthened on hopes the United States and China may soon resolve their trade dispute.

Tightened supply following Opec-led crude production cuts aided earlier 1 per cent increases for both oil benchmarks, but concerns about the global economy kept markets in check.

International Brent crude futures were at $60.55 per barrel at 1440 GMT, down $1.13, or 1.83 per cent. US West Texas Intermediate (WTI) crude futures fell 87 cents to $51.72 per barrel.

WTI and Brent are set for their second week of gains, rising nearly 8 per cent and 6 per cent respectively.

“Profit-taking has weighed on oil prices in today’s trading session following gains made earlier in the week,” said Abhishek Kumar, senior energy analyst at Interfax Energy in London.

“A lack of tangible progress in the US-China trade talks, ongoing political uncertainty in the US, and fears that China’s weakening economy could adversely hit global oil demand have also contributed towards the weakness in oil prices.” Markets had been supported by hopes that an all-out trade war between Washington and Beijing might be averted. Three days of talks concluded this week with no concrete announcements, but higher-level talks may convene later this month.

However, markets remain concerned by mounting signs that China’s growth in 2018 and 2019 will be the lowest since 1990.

Most analysts have downgraded their global economic growth forecasts below 3 per cent for 2019, with some fearing a recession amid trade disputes and spiralling debt.

“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 are receiving support from supply cuts led by the Organization of the Petroleum Exporting Countries and aimed at reining in a glut that emerged in the second half of 2018.

Lower oil exports from Iran since November, when US sanctions against it resumed, have also supported crude.

Playing a key part in the emerging glut was the United States, where crude oil production soared by more than 2 million barrels per day (bpd) in 2018 to a record 11.7 million bpd.

Consultancy JBC Energy this week said it was likely that US crude production was “significantly above 12 million bpd” by this month.