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Brent crude futures were down 13 cents, or 0.1%, to $86.72 a
barrel at 0955 GMT, while U.S. West Texas Intermediate crude
futures slipped 10 cents, or 0.1%, to $82.36 a barrel.
Both benchmarks gained more than $2 a barrel on Thursday, but
were on track to lose about 4% on the week.
China's manufacturing activity unexpectedly contracted in
October. The official purchasing managers' index (PMI) fell to
49.5 in October from 50.2, dipping back below the 50-point level
demarcating contraction from expansion, data from the National
Bureau of Statistics showed on Wednesday.
On Friday, a private sector survey showed China's services
activity expanded at a slightly faster pace in October, but
sales grew at the softest rate in 10 months and employment
stagnated as business confidence waned.
Meanwhile, a U.S. Labor Department employment report later on
Friday is expected to show labour market conditions steadily
easing, with annual wage growth the smallest in nearly 2-1/2
years and significant growth in the supply of workers.
The report could bolster the view that the U.S. Federal Reserve
need not raise interest rates further.
The Fed held interest rates steady on Wednesday, while the Bank
of England held rates at a 15-year peak. The stable policies
kept oil prices supported as some risk appetite returned to
markets.
Meanwhile, geopolitical concerns remained in focus, as Israeli
forces on Thursday encircled Gaza City - the Gaza Strip's main
city - in their assault on Hamas, its military said, but the
Palestinian militant group resisted their drive with hit-and-run
attacks from underground tunnels.
"The oil market will be watching for an escalation of tensions,
particularly on the Lebanese border, as Hezbollah attacks
increase," City Index Fiona Cincotta said.
Hezbollah leader Sayyed Hassan Nasrallah will on Friday make his
first public comments since Hamas and Israel went to war, a
speech that will be scrutinised for clues on how the group's
role in the conflict might evolve.
On the supply side, top oil exporter Saudi Arabia is expected to
reconfirm an extension of its voluntary oil-output cut of 1
million barrels per day through December, based on analyst
expectations.
(Additional reporting by Jeslyn Lerh in SingaporeEditing by Mark
Potter)
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