Brent edged lower and US crude rallied late to settle, reducing Brent's premium to it US counterpart, while both contracts posted second consecutive weekly gains. 

Prices felt pressure early, after ratings agency S&P downgraded Spain's credit rating. But oil pared losses ahead of US GDP figures that showed growth cooled in the first quarter. 

But some investors believe slowing US growth may prompt the Federal Reserve to launch a third round of government bond  buying, or quantitative easing, known on Wall Street as QE3. 

"Bad news for the economy is being interpreted as good news for commodities because it may put QE3 back on the table," said Dominick Chirichella, senior partner at Energy Management Institute in New York. "Whether or not that trade has any longevity is not clear." 

The dollar's weakness and strong equities on Wall Street added support for crude, along with a rise in US consumer sentiment. 

Brent June crude fell only 9 cents to settle at $119.83, having traded in a range of $119.06 to $119.95. Brent had a nearly 1 percent weekly gain but remained on pace to post a more than 2 percent monthly loss. 

US June crude rose 38 cents to settle at $104.93, having reached $105 but stalling ahead of the 50-day moving average of $105.10. The weekly gain was 1.8 percent on track for a similar monthly rise. 

Brent's premium to its US counterpart narrowed to end at $14.90 based on settlements, after reaching $15.64 intraday. 

Total crude trading volumes were very light, well under 30-day averages for both Brent and US crude. 

The Chicago Board Options Exchanges Oil Volatility Index fell to a record low below 25 intraday. The index is a measure of implied volatility and a low reading is an indication of a low risk perception in the markets.

US RBOB gasoline futures edged up in choppy trading, while heating oil dipped, as front-month May contracts approach expiration on Monday. 

US economic growth cooled in the first quarter to a 2.2 percent annual rate, the government said in its advanced estimate, moderating from the fourth quarter's 3.0 percent.

The Federal Reserve reiterated its intent to keep interest rates low and Fed chief Ben Bernanke said the central bank stood ready to move to support the economy if it faltered.  

US consumer sentiment inched up in the Thomson Reuters/University of Michigan's final April reading, putting the index at its highest since February 2011.

The dollar it slumped to multi-week lows against the euro and yen on the possibility of more stimulus. A weaker US currency can be supportive to dollar-denominated oil by making it less expensive to consumers using other currencies.

The US Energy Information Administration (EIA) said on Friday that global oil supply exceeded demand by 500,000 barrels per day over the last two months as Saudi Arabia lifted output, more than countering rising non-OPEC outages. 

The report is required every 60 days by the Iran sanctions law enacted in December.

This month's revived talks involving Iran and major powers about Tehran's disputed nuclear program eased the geopolitical fear premium in oil prices, but traders and analysts remain skeptical the talks will succeed and a European Union embargo on Iranian crude set for July looms. 

Disrupted production in the North Sea, Yemen and Sudan and turmoil in OPEC-member Nigeria have supported oil prices even as signs of slowing global economic growth, lackluster US demand and rising stockpiles pulled crude prices off 2012 peaks reached in the first quarter. 

US crude received support late on Friday from a separate EIA report showing a revised higher February oil demand number, traders and broker said.