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UPDATE 2-Oil set for weekly loss on weak economic data

Shadia Nasralla and Bozorgmehr Sharafedin

* Brent, WTI set for biggest weekly loss in 5 weeks

* Losses checked by OPEC+ output cut extension (Changes dateline to London, updates prices)

LONDON, July 5 (Reuters) - Crude oil prices fell on Friday on weak economic indicators from the United States and Germany, shrugging off tensions around Iran and this week's decision by OPEC and its allies to extend a supply cut deal until next year.

U.S. West Texas Intermediate (WTI) crude futures were down $0.79 at $56.55 per barrel by 0754 GMT. There was no settlement price on Thursday because of the Independence Day holiday in the United States.

Front-month Brent crude futures were down $0.23 at $63.07 per barrel. Both benchmarks were set for their biggest weekly falls in five weeks.

"Oil prices eased lower on Friday morning as concerns over global economic growth offset escalating geopolitical tensions in the Middle East," RBC analysts said in a note.

Weak industrial demand gave a bearish signal for oil demand.

German industrial orders fell far more than expected in May, and the Economy Ministry warned on Friday that this sector of Europe's largest economy was likely to remain weak in the coming months.

In the United States, new orders for factory goods fell for a second straight month in May, government data showed on Wednesday, stoking economic concerns.

The U.S. Energy Information Administration on Wednesday reported a weekly decline of 1.1 million barrels in crude stocks, much smaller than the 5 million barrel draw reported by the American Petroleum Institute earlier in the week and analyst expectations.

Giving a floor to prices was this week's commitment to cut production from the world's largest exporters - including members of the Organization of the Petroleum Exporting Countries (OPEC) and other producers such as Russia, a grouping known as OPEC+.

"Global growth remains the main factor holding back crude prices," said Alfonso Esparza, senior analyst at OANDA. "The OPEC+ deal will keep prices from falling too hard, but there must be an end to trade protectionism to assure the demand for energy products recovers."

Ongoing tension in the Middle East offered some support.

British Royal Marines seized a giant Iranian oil tanker in Gibraltar on Thursday for trying to take oil to Syria in violation of EU sanctions, a dramatic step that drew Tehran's fury and could escalate its confrontation with the West.

(Additional reporting by Colin Packham in Sydney; editing by David Evans)