Oil prices were set for a second straight week of gains despite edging lower on Friday, as recent US economic data boosted optimism about demand from the world’s top oil consumer.

Brent crude futures have risen about 1.5 per cent this week, while US West Texas Intermediate crude futures have increased about 1.3 per cent.

On Friday, Brent fell 15 cents, or 0.19 per cent, to $80.89 per barrel by 0810 GMT, while WTI fell 25 cents, or 0.32 per cent, to $77.91.

US retail sales data on Thursday beat analysts’ expectations, while separate data showed fewer Americans had filed new applications for unemployment benefits last week, sparking renewed optimism around US economic growth.

“Receding US recession concerns have come to the aid of crude bulls this week, with better-than-expected retail sales and jobless claims figures allaying fears of a more rapid than expected deterioration in US economic conditions,” said Michael Brown senior research strategist at Pepperstone.

Crude prices are also being supported by lingering geopolitical risk.

Analysts at consultancy FGE said oil markets would return their focus to geopolitics, amid warnings of retaliatory attacks from Iran against Israel over the killing of a Hamas leader in Tehran.

A fresh round of negotiations began on Thursday to secure a ceasefire in the Gaza war, even as Israeli troops continued their assault on the Palestinian enclave.

The talks, which have been boycotted by Hamas, were extended and will resume in the Qatari capital Doha on Friday.

“Expectations remain that a response will happen given that Iran needs to save face amongst neighbour states. A new round of talks over a ceasefire in Gaza could see the premium eroded if progress is made,” said Panmure Liberum analyst Ashley Kelty.

Keeping a lid on oil prices, Chinese refineries sharply lowered crude processing rates last month on tepid fuel demand.

The Organization of the Petroleum Exporting Countries (OPEC) on Monday pared its demand outlook for this year, citing softer expectations for China.