* China tells U.S. to shut Chengdu consulate
* Barclays (LON:BARC) sees near-tem oil price correction if recovery slows
* Euro zone businesses bounce back in July
* U.S. oil rig count rises for first week since March (Updates prices, adds Baker Hughes rig data)
By Stephanie Kelly
NEW YORK, July 24 (Reuters) - Oil prices fell on Friday, pressured by tensions between the United States and China, but some supportive economic data in Europe tempered losses.
Brent crude futures LCOc1 fell 34 cents to $42.97 a barrel by 1:11 p.m. EDT (1711 GMT). U.S. West Texas Intermediate (WTI) crude CLc1 futures slipped 18 cents to $40.89 a barrel.
For the week, Brent was on track to fall 0.5%, while U.S. crude was set to rise 0.6%.
China ordered the United States to close its consulate in the city of Chengdu on Friday, responding to a U.S. demand this week that China close its Houston consulate. renewed tensions between the world's top two oil consumers stoked worries about oil demand, which already faces headwinds including rising coronavirus cases in the United States.
The resurgent pandemic has darkened the U.S. economic outlook. Some states have reinstated restrictions to curb the latest outbreak, which is expected to decrease fuel consumption.
The number of Americans filing for unemployment benefits hit 1.416 million last week, unexpectedly rising for the first time in nearly four months. prices could see a near-term correction if a recovery in fuel demand slows further, especially in the United States, Barclays Commodities Research said.
Still, the bank lowered its oil market surplus forecast for 2020 to an average of 2.5 million barrels per day (bpd) from 3.5 million bpd previously. the United States, the oil and gas rig count, an early indicator of future output, fell by two to an all-time low of 251 in the week to July 24, according to data on Friday from energy services firm Baker Hughes Co BKR.N . However, energy firms added one oil rig in the first weekly increase since March. Friday's market losses, Euro zone business activity grew in July for the first time since the coronavirus pandemic hit, according to IHS Markit's flash Composite Purchasing Managers' Index (PMI). The index is seen as a good indicator of the bloc's economic health. economic data in Europe was much better than anticipated, which would suggest that demand destruction in recent months because of COVID-19 may not have been as bad as people thought," said Phil Flynn, senior analyst at Price Futures group in Chicago.
Meanwhile, U.S. business activity increased to a six-month high in July. U.S. companies, however, reported a drop in new orders as new COVID-19 cases spiked across the country.