Sept 20 (Reuters) - Oil prices eased on Friday, but were on track to register gains for a second straight week following a large cut in U.S. interest rates and declining global stockpiles.
Brent futures were down 32 cents, or 0.43%, at $74.56 a barrel at 1223 GMT while U.S. WTI crude futures fell 30 cents, or 0.42%, at $71.65.
Still, both benchmarks were up more than 4% on the week.
Prices have recovered after Brent fell below $69 for the first time in nearly three years on Sept. 10.
"The market concluded that a sub-$70 level combined with hedge funds holding a record weak belief in higher prices of crude and fuel products would require a recession to be justified, a risk this week's bumper US rate cut helped reduce," Ole Hansen, head of commodity strategy at Saxo Bank, said.
Prices rose more than 1% on Thursday following the U.S. central bank's decision to cut interest rates by half a percentage point on Wednesday.
Interest rate cuts typically boost economic activity and energy demand, but some analysts view them as symptomic of a weak U.S. labour market.
"U.S. interest cuts have supported risk sentiment, weakened the dollar and supported crude this week," UBS analyst Giovanni Staunovo said.
"However, it takes time until rate cuts support economic activity and oil demand growth," he added.
The Fed projected a further half point rate cut by year-end, a full point next year and a half point trim in 2026.
Further support for oil prices came from a decline in U.S. crude inventories, which fell to a one-year low last week.
A counter-seasonal oil market deficit of around 400,000 barrels per day (bpd) will support Brent crude prices in the $70 to $75 a barrel range during the next quarter, Citi analysts said on Thursday, but added prices could plunge in 2025.
Rising tensions in the Middle East, raising the risk of supply disruption, further boosted the oil market. Walkie-talkies used by Lebanese armed group Hezbollah exploded on Wednesday following explosions of pagers the previous day.
A slowing economy in major commodity consumer China, meanwhile, weighed on market sentiment. Refinery output in China slowed for a fifth month in August and industrial output growth hit a five-month low.
Reporting by Arunima Kumar in Bengaluru and Sudarshan Varadhan in Singapore; editing by Sharon Singleton, Jason Neely, David Evans and Barbara Lewis
