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NEW YORK (Reuters) - Oil prices fell on Friday and posted a weekly loss after data showed that first-quarter economic growth in China, the world's No. 2 oil consumer, was the weakest in nearly three years, reinforcing concerns about slowing demand for petroleum.
A stronger dollar and a slip in U.S. consumer confidence in early April, as gasoline prices hit household budgets, also pressured oil prices.
Caution ahead of talks between Iran and five permanent U.N. Security Council members plus Germany about Tehran's disputed nuclear program helped limit oil's losses heading into the weekend, as did news of falling North Sea oil production.
"The Chinese numbers were a little bit disappointing ... (but) we're not heading into a new substantial downward trend," said Tony Machacek, an oil futures broker at Jefferies Bache Ltd. "There's still quite a few geopolitical issues knocking about."
Expiring May Brent crude managed to recover late and settled at $121.83 a barrel, up 12 cents, after dropping to $120.77 and with trading volume just above 12,000 lots traded.
That left front-month Brent down 1.3 percent for the week, having fallen four of the past five weeks.
The more actively traded Brent crude for June delivery slipped 31 cents to settle at $121.21 a barrel.
U.S. May crude fell 81 cents to settle at $102.83, posting a small, 48-cent loss for the week.
Total crude trading volumes were below 30-day averages for both contracts, with brokers and traders citing reluctance to take more risk ahead of Iran's talks on its nuclear program.
Speculators cut their net long positions in U.S. crude oil futures and options positions in the week to April 10 to the lowest level since December, U.S. Commodity Futures Trading Commission data showed.
U.S. heating oil edged up, while gasoline futures dipped.
Heating oil trading volume was 24 percent above the 30-day average, while gasoline turnover lagged its 30-day average by 6 percent.
"As this month progresses, seasonally motivated purchases into the RBOB (gasoline) futures should begin to dissipate with the gasoline renewing last week's downside lead across the complex," Jim Ritterbusch, president at Ritterbusch & Associates, said in a note.
China's annual growth rate eased to 8.1 percent in the first quarter, short of expectations and down from 8.9 percent in the previous quarter.
China's implied oil demand fell 2 percent in March from February, to the lowest level in five months, but was up 3.4 percent from a year ago.
Iran and the six world powers prepared for talks set for Saturday aimed at easing fears that a deepening dispute over Tehran's nuclear program could ignite a conflict and disrupt oil supply from the region.
The potential for supply disruption and tightening sanctions have helped push crude prices higher in 2012. The European Union's ban on importing Iranian oil set to start in July has already curbed Tehran's exports.
Oil traders and analysts remained skeptical that the revived negotiations can yield a successful result.
Also limiting losses, even in the face of higher production from Saudi Arabia and signs of slower global economic growth, has been lower North Sea output.
Crude oil output from 12 North Sea grades is set to fall an average 9.8 percent in May from April.
Top oil exporter Saudi Arabia stressed again on Friday it was determined to bring down high oil prices and was working with fellow OPEC members towards that goal.
"We are seeing a prolonged period of high oil prices," Oil Minister Ali al-Naimi said in a statement during a visit to Seoul. "We are not happy about it. (The Kingdom of Saudi Arabia) is determined to see a lower price and is working towards that goal."
Additional reporting by Gene Ramos in New York, Alessandra Prentice in London and Manash Goswami and Florence Tan in Singapore; editing by Sofina Mirza-Reid, Jim Marshall and David Gregorio