UPDATE 2-Oil steadies, set for weekly gain amid hopes for end to U.S.-China trade war

* Brent heading for a fourth weekly gain
* WTI on track for a second weekly increase
* Interactive graphic on U.S. petroleum stocks: https://tmsnrt.rs/2XkQF8e

(Updates prices)
By Aaron Sheldrick
TOKYO, Sept 6 (Reuters) - Oil prices were steady on Friday,
with crude benchmarks poised for multi-week gains amid a sharp
drawdown in U.S. crude inventories, while trade tensions eased
after Washington and Beijing agreed to hold high-level talks
next month.
Brent crude was up 6 cents at $61.01 a barrel by 0339 GMT,
while U.S. West Texas Intermediate (WTI) crude was up 5 cents at
$56.35 a barrel.
Both contracts spent the Asian trading session ticking
either slightly higher or lower. Brent is set to mark its fourth
weekly gain, while U.S. crude is headed for a second weekly
rise.
Beijing and Washington on Thursday agreed to hold high-level
talks in early October in Washington, cheering investors hoping
for an end to the trade war between the world's two biggest
economies that has brought tit-for-tat tariff hikes, chipping
away at economic growth. The prolonged dispute had a dampening effect on oil prices,
although they have risen over the year, helped by production
cuts led by the Organization of the Petroleum Exporting
Countries and its allies, including Russia, to drain
inventories.
"Upside potential for crude oil futures will remain limited,
however, as strong U.S. production and demand-side concerns cap
bullish gains for the current term," said Benjamin Lu,
commodities analyst at Phillip Futures in Singapore.
He also cited "subdued economic momentum, global trade
uncertainties and rising market risks" for reasons to expect
that U.S. crude would be range-bound between $55-$60 over the
third quarter.
U.S. crude and product inventories fell last week, with
crude drawing down for a third consecutive week despite a jump
in imports, the Energy Information Administration (EIA) said.
EIA/S
Crude stocks dropped 4.8 million barrels, nearly double
analysts' expectations, to 423 million barrels, their lowest
since October 2018.
Oil prices on Thursday soared more than 2% after the EIA
report, although they gradually trimmed gains as investors are
not entirely convinced that the Sino-U.S. trade talks will yield
results.

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GRAPHIC: U.S. petroleum inventories https://tmsnrt.rs/2XlX17b
TECHNICAL CHART: U.S. oil may test support at $55.74
L3N25X0O2
TECHNICAL CHART: Brent oil may hover below $61.54 L3N25X0B
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