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MELBOURNE - Oil prices dipped on Friday after posting strong overnight gains on a weaker dollar and a bigger-than-expected fall in U.S. crude stocks and were headed for small gains on the week ahead of a highly anticipated U.S. monthly jobs report.

U.S. West Texas Intermediate (WTI) crude futures fell 24 cents, or 0.3%, to $69.75 a barrel at 0200 GMT, while Brent crude futures fell 13 cents, or 0.2%, to $72.90 a barrel.

The move down was probably due to traders squaring positions ahead of the U.S. non-farm payrolls report for August, on worries the report may be weaker than consensus forecasts, said Stephen Innes, managing partner at SPI Asset Management.

Both benchmark oil contracts jumped 2% on Thursday, putting WTI on track to climb 1.5% for the week, while Brent headed for a 0.3% weekly gain.

The increase this week has been mostly based on a falling U.S. dollar, which makes oil cheaper in other currencies, and the fallout from Hurricane Ida.

About 1.7 million barrels per day of oil production remains shut in the U.S. Gulf of Mexico, with damage to heliports and fuel depots slowing the return of crews to offshore platforms, sources told Reuters.

Offsetting the supply impact, oil demand has been curbed as extended power outages are slowing the reopening of refineries that were shut in Louisiana.

Demand is likely to be in focus after the Organization of the Petroleum Exporting Countries and allies, together called OPEC+, this week stuck to their plan to add 400,00 barrels per day (bpd) back to the market over the next few months amid surging COVID-19 cases, analysts said.

"With the near-term OPEC+ catalyst out of the way, the focus shifts again to the shape of the demand recovery, with some concern that it will be challenging to keep the market in deficit next year if OPEC+ continues to add supply at the anticipated 400,000 bpd pace," Innes said.

(Reporting by Sonali Paul. Editing by Gerry Doyle)