PERTH - Oil prices were little changed on Friday before a long holiday weekend in the US, as traders held on to hopes that attempts to secure peace in the Middle East between the US and Iran would succeed.

Brent futures climbed 7 cents, or 0.1%, to $71.87 a barrel as of 07:37 GMT. West Texas Intermediate was down 6 cents, or 0.09%, to $68.63 a barrel.

US markets will be closed on Friday ahead of the US Independence Day holiday on Saturday.

During the prior session the two benchmarks hit their lowest levels since before the US-Israeli war on Iran began in late February. Brent for the week was down 0.16% and WTI down 0.87%, the smallest weekly movements for both in months.

“It's a case of guarded optimism, with the market wanting to believe the peace efforts will hold, but it’s still hedging its bets until it sees real evidence on the water,” said Tim Waterer, chief market analyst at KCM Trade.

SOME SHIPPING RESUMES THROUGH THE STRAIT

Some shipping has resumed through the Strait of Hormuz, as called for under the initial deal between Iran and the US, but levels of uncertainty are high after the two countries exchanged strikes last weekend following an Iranian attack on a cargo ship.

With the prospect of being able to ship more oil, Gulf producers are working to increase output.

Kuwait's oil production rose sharply to 1.65-million barrels per day in June from 580 000 bpd in May, a source familiar with the matter told Reuters on Thursday.

At least five supertankers carrying a total of 10-million barrels of Saudi oil have exited the Strait of Hormuz and Saudi Aramco has switched to spot pricing from longer-term contracts to speed sales in Asia, according to trade sources and shipping data.

As the availability of supplies grows, the market structure has turned from backwardation to contango, reflecting decreasing expectation of future shortages.

The spread between front-month Brent and one-month forward turned negative on June 24, while the six-month spread turned negative on Thursday.

"The return of this supply coincides with continued SPR releases," ING analysts said in a note on Friday, referring to the US Strategic Petroleum Reserve.

The cheaper near-term supplies could encourages buyers, they added, which could support prices.