New York's main oil futures contract, light sweet crude for delivery in September, closed up 1.08 dollars at 71.14 dollars per barrel. The contract had earlier dipped to 69.60 dollars, however.

In London, Brent North Sea crude for October delivery settled up 72 cents at 72.30 dollars per barrel.

Prices fell beneath 70 dollars in a "continued reaction to the signs of an economic slowdown in the United States", said Societe Generale analyst Deborah White.

Recent US economic data has suggested the world's largest economy is cooling, particularly as economic growth slowed to 2.5 percent in the second quarter from a sizzling 5.6 percent clip in the first quarter.

Crude futures saw steep losses this week after a series of other economic reports appear to confirm a moderation in the American economy.

That dampens prospects for crude demand because the US is also the biggest consumer of energy in the world.

The second biggest energy consumer, China, also rattled the market on Friday when it hiked interest rates.

The news "highlighted the fact that China was attempting to slow down its economy", which could impact on global oil demand, White added.

However, crude futures remained supported on Friday by the Iranian nuclear energy crisis, traders said.

Iran, the world's fourth biggest crude oil producer, has until August 31 to halt its uranium enrichment programme or face the threat of UN sanctions.

"Crude futures were higher (on Friday), recovering slightly after falling for last few days amid renewed concerns over Iran," said Sucden analyst Michael Davies.

The US will move quickly for UN Security Council action on sanctions against Iran if Tehran refuses to halt uranium enrichment by month's end, Undersecretary of State Nicholas Burns said Thursday.

Oil market watchers are concerned that possible sanctions against Iran may lead to severe disruption to global supplies of energy.

"Next Tuesday, Iran is expected to respond to the incentive package. If Iran refuses the offer, wed anticipate this to be bullish for crude next week," said Bill O'Grady, an AG Edwards analyst.

Prices had begun falling on Monday after a ceasefire went into effect between Israel and the Shiite militia Hezbollah, ending a month of violence and easing fears of a wider conflict in the Middle East.

Added to the picture, the market was calmed by news that BP would continue pumping half of output at the Prudhoe Bay oil field in Alaska, which normally makes up 8.0 percent of total US production. The company announced a pipeline leak there on August 6 and began halting operations.

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