Investing.com– Oil prices edged higher Friday, lifting from near seven-week lows, but were headed for steep losses this week as signs of robust U.S. stockpiles and production dashed hopes for tight crude markets in the coming months. 

At 08:05 ET (12:05 GMT), rose 0.6% to $84.20 a barrel, while gained 0.6% to $79.44 a barrel.

Crude set for hefty losses this week 

Despite these gains, both contracts were still trading close to their weakest levels in seven weeks, and were set to lose between 5% and 6% this week. 

An unexpected build in U.S. and data showing increased U.S. production suggested that oil markets were not as tight as traders were initially hoping. 

This was coupled with easing fears of supply disruptions in the Middle East, as Israel and Hamas continued negotiations over a potential ceasefire. 

Concerns over slowing economic growth – which could eat into demand – also came into play this week, especially after the U.S. Federal Reserve warned that it will keep interest rates higher for longer.

Middling data from top crude importer China also factored into fears of sluggish demand. Business activity in the country was seen slowing in April after a strong start to the year. 

Markets were also on edge ahead of the release of key U.S. data later in the day, which is likely to factor into the outlook for interest rates. 

“The US jobs report which will be released later today, has the potential to be a key driver for oil prices in the immediate term,” analysts at ING said, in a note.

OPEC+ could extend production cuts 

Still, crude found some relief on Friday from a softer , as the greenback retreated in anticipation of the nonfarm payrolls data. 

Also helping the tone was a report from Reuters that the Organization of Petroleum Exporting Countries and allies, a group known as OPEC+, could potentially maintain their current run of 2.2 million barrels per day of production cuts beyond the end-June deadline, especially if demand does not pick up.

But cartel members are yet to begin formal talks over the matter. Still, extended production cuts by the cartel could herald tighter markets later in 2024. 

Adnoc, the UAE’s national oil company, has increased its production capacity by 200,000 barrels per day to 4.85 million b/d, leaving the producer with a spare capacity above 1.7m b/d, after producing a little over 3.1m b/d in April.

“This could see the UAE push for a higher baseline when OPEC+ discusses its output policy for the second half of 2024,” ING added.

(Ambar Warrick contributed to this article.)