CORRECTED-UPDATE 4-Oil rises after U.S. Navy downs Iranian drone; set for weekly fall

(Corrects price move in paragraph three)
* Prices rise on Mideast tensions
* Oil still set for weekly decline
* Demand outlook remains bearish

By Dmitry Zhdannikov
LONDON, July 19 (Reuters) - Oil prices rose on Friday as
tensions spiked again in the Middle East after the United States
said it had destroyed an Iranian drone in the Strait of Hormuz,
a major chokepoint for global crude flows.
Benchmark crude prices were still on track for their biggest
weekly decline in seven weeks, however, having fallen sharply
earlier in the week on concerns over global oil demand amid
slowing economic growth.
Brent crude LCOc1 futures were up $1.11, or 1.78%, at
$63.04 a barrel by 1037 GMT, having risen as high as $63.32.
Brent fell 2.7% on Thursday, its fourth straight session of
losses, and was set for a weekly drop of around 5%.
West Texas Intermediate crude CLc1 futures were 81 cents,
or 1.44%, higher at $56.11 per barrel after touching $56.36.
They ended 2.6% lower in the previous session and were headed
for a weekly decline of around 6%.
Indications that the U.S. Federal Reserve will cut rates
aggressively to support the economy were also behind Friday's
gains, said Stephen Innes, managing partner at Vanguard Markets.
"The Fed backstop and the report of the U.S. Navy shooting
down an Iranian drone are providing a modicum of support for oil
markets amidst a very bearish landscape," he said.
The United States said on Thursday that a U.S. Navy ship had
"destroyed" an Iranian drone in the Strait of Hormuz after the
aircraft threatened the vessel, but Iran said it had no
information about losing a drone. Also on Thursday, two influential Federal Reserve officials
sharpened the public case for acting to support the U.S.
economy, reviving bets the central bank may deliver a
larger-than-expected cut this month. Still, the longer-term outlook for oil has grown
increasingly bearish.
The International Energy Agency (IEA) is reducing its 2019
oil demand growth forecast to 1.1 million barrels per day (bpd)
from 1.2 million bpd previously due to a slowing global economy
amid a U.S.-China trade spat, its executive director said on
Thursday. The IEA may cut further if the global economy and especially
China shows further weakness, Fatih Birol told Reuters.
"Macro-economic concerns, uncertainty on trade discussions
and increasing oil supply from the U.S. continued to weigh on
sentiments," said Warren Patterson, head of commodities at ING.
Bank of America Merrill Lynch said any start of U.S.-Iran
talks or a U.S.-China trade deal would reduce volatility and
anchor Brent oil prices in a $60-$67 per barrel range.

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TECHNICALS: U.S. oil may bounce more to $56.98 L4N24K0NU
TECHNICALS: Brent oil may bounce to $63.84 L4N24K0C4
MAP: Iran's guards say they seized a foreign oil tanker in the
Gulf https://tmsnrt.rs/32tzK6J
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