Oil headed for a weekly loss — after hitting the lowest close since January midweek — on a challenging demand outlook, sinking product prices, and US efforts to secure a cease-fire in Gaza.

Brent crude traded above $77 a barrel, about 3% lower this week, while West Texas Intermediate was near $73. Data this week showed US manufacturing contracting at the fastest pace this year, as well as signs of labor market softness. In Europe, meanwhile, futures for diesel — a key industrial fuel — have dropped to the lowest level in 14 months.

Oil has shed all of its year-to-date gains as the impact of OPEC+ supply curbs has been overshadowed by a poor economic outlook in major economies, with China showing signs of weakness along with the US. While the cartel led by Saudi Arabia and Russia has said it aims to ease some output curbs in the fourth quarter, crude's slide makes that plan more challenging.

In the Middle East, meanwhile, Israeli negotiators arrived in Cairo for talks aimed at cementing an agreement to pause the war in Gaza between Israel and Hamas, a step that could de-escalate tensions in the crude-producing region.

Oil market timespreads point to less-tight conditions, with the gap between Brent's two nearest contracts narrowing. The differential was last 65 cents a barrel in backwardation, compared with a high of 92 cents last week.

Later Friday, traders will track a central bankers' symposium at Jackson Hole, Wyoming, where Federal Reserve Chair Jerome Powell is set to give an address that could offer clues on the path forward for US monetary policy. His remarks could impact the dollar, as well as wider energy demand. – CNBC