Oil slipped on Friday, heading for a weekly drop of 1.3 percent, as falling equity markets tempered an early boost from indications that the first storm of the Atlantic hurricane season might be developing.

Asian stocks slid on Friday for a fourth straight session, driven by expectations of tighter financial regulation and uncertainty about the global economic recovery ahead of the weekend G20 meeting. Concerns about the Greek debt crisis had also sent Wall Street lower on Thursday.

Overall the market is still caught in a tight range between $70 and $80 and I don't see any reason to break that range, just like the stock market, said Keichi Sano, general manager of research at SCM Securities in Tokyo.

U.S. crude for August shed 32 cents to $76.19 a barrel at 0445 GMT, heading for the first weekly decline in three weeks. Still, prices are up 18 percent from a trough below $65 on May 20. ICE Brent for August fell 20 cents to $76.27.

If people pay attention to the EU sovereign risk news, stock markets go down and commodities go down. The U.S. economic data is not so good for the last couple of days, so that is a bearish factor, Sano said.

U.S. durable goods orders reported Thursday were not robust enough to dispel doubts about the U.S. economy or the negative effect of the Federal Reserve's cautious outlook on growth.

SEASON'S FIRST STORM

The U.S. National Hurricane Center late on Thursday said that a weather system headed toward the Gulf of Mexico may develop into a tropical cyclone, assigning a probability of 60 percent for it to reach that status in the next two days, up from 40 percent earlier.

Weather models project the system will cross Mexico's Yucatan Peninsula from the Caribbean over the next few days, re-emerging in the gulf, where both Mexican and U.S. offshore oil production facilities are concentrated.

Most forecasts expect the weather system to hit the coast near the Texas-Mexico border, with Mexican oil fields producing more than 2 million barrels per day (bpd) near its path.

But some models expect the wave to turn toward Florida and the eastern Gulf of Mexico, closer to U.S. offshore production and where BP Plc (BP.L) is trying to clean up the biggest oil spill in U.S. history. The tropical depression would be named Alex.

If a hurricane comes in line like Katrina and Rita, then that would be a big problem, Sano said, referring to the two 2005 hurricanes which virtually paralyzed the U.S. gulf industry for weeks.

If the hurricane hits refineries, that would cause shutdowns and lower utilization rates and that could naturally cause higher product prices.

(Editing by Himani Sarkar)

Mexico Storm