Oil headed for a second weekly drop as demand concerns returned to the fore, snuffing out gains driven by Saudi Arabia's unilateral pledge to cut production.

West Texas Intermediate fell to near $71 a barrel and is down more than 1% this week. Optimism that Riyadh's move to reduce output by at least 1 million barrels a day was fast replaced by a worsening outlook for consumption. Citigroup Inc. said the cuts won't offset weak market fundamentals.

Reports in Middle Eastern media -- including Israel's Haaretz newspaper -- that the US and Iran had made progress on nuclear talks that could lead to more supply from the Islamic Republic helped push crude down 1.7% on Thursday. However, US officials said reports of an interim deal are false. 

WTI for July delivery fell 0.7% to $70.79 a barrel at 8:15 a.m. in Singapore. Brent for August settlement dropped 0.7% to $75.40 a barrel.

Source : Bloomberg