(Reuters) – Oil prices inched lower on Friday after U.S. jobs data did little to allay fears of further interest rate hikes, but were on track for their second straight weekly gain after a larger-than-expected fall in U.S. oil stockpiles.

Erasing earlier gains, Brent crude futures were down 38 cents, or 0.5%, at $76.14 a barrel at 1309 GMT, while U.S. West Texas Intermediate crude slipped 50 cents, or 0.7%, to $71.30 a barrel.

Both benchmarks were set to gain over 1% on the week.

Brent’s six-month backwardation, where nearby contracts trade above later ones indicating supply tightness, has risen sharply in recent sessions and touched a one-month high on Friday.

But Brent is still trading around $10 a barrel below April peaks, and has remained between around $71 and $79 a barrel since early May in the face of interest rate hikes and weak Chinese economic data.

U.S. crude stocks fell more than expected and gasoline inventories posted a large draw, the Energy Information Administration said on Thursday. [EIA/S]

Top oil exporters Saudi Arabia and Russia this week have also announced fresh output cuts bringing total cuts by OPEC and its allies to around five million barrels per day (bpd), equating to 5% of global oil demand.

OPEC will likely maintain an upbeat view on oil demand growth for next year, sources close to OPEC said.

Closely-watched data on Friday showed U.S. job growth slowed more than expected in June after surging in the prior month, but labour market conditions remain tight and wage gains continue.

According to the CME’s FedWatch Tool, the probability that the Fed increases interest rates by 25 basis points at its July 25-26 meeting is now around 95% from 92% just prior to the data coming out.

Investors will look for cues on rate paths from U.S. and Chinese inflation data next week.