Oil prices settled lower Friday, but eked out a gain for the week as elevated Middle East tensions and a healthier demand outlook overshadowed worries about the impact of slowing global growth.     

By 14:30 ET (19:30 GMT), the U.S. crude futures settled 0.9% lower at $73.41 a barrel, though still ended the week in the green, while the Brent contract settled 54 cents lower at $78.56 a barrel. 

Crude set for weekly gains 

The crude registered gains this week as the fraught situation in the Middle East means many companies continue to divert cargoes around Africa, adding to journey times and costs.

U.S.-led forces continued to clash with the Iran-backed Houthi group in the Red Sea, while Iran and Pakistan have also appeared to open up a new conflict, pointing to further instability in the oil-rich region.

Prices were also supported by an unexpected drop in U.S. crude inventories, which also came as severe cold weather knocked off about 40% of oil output in North Dakota. But limited travel conditions spurred a sustained, outsized build in oil product inventories.

IEA lifts 2024 demand growth forecast 

Sentiment has also been boosted by bullish monthly reports from both the International Energy Agency and the Organization of Petroleum Exporting Countries during the week.

The IEA raised its 2024 oil demand growth forecast on Thursday, with the agency looking for an economic recovery in China and an eventual decrease in interest rates.

Global growth remains weak 

That said, traders remains wary after weak U.K. retail sales reminded the group that economic growth, and thus demand for energy, remains fragile in many parts of the globe.

U.K. retail sales slumped 3.2% on the month in December, the biggest drop for almost three years, according to data released earlier Friday, raising the risk that this economy entered recession in the fourth quarter.

This followed weaker than expected growth data from top importer China in the fourth quarter, released earlier in the week, indicating sustained economic weakness in the world’s largest oil importer.