Crude Oil Ends Lower On Demand Worries, Russia Sanctions; Sheds 1.1% For Week

(RTTNews) - U.S. crude oil shed early gains to end lower Friday, on renewed concerns of a global supply glut even as the U.S. imposed new sanctions on Russia for its involvement in stoking the conflict in eastern Ukraine, which follows the European Union sanctions earlier this week.

Oil futures shed about 1.1 percent for the week.

Notwithstanding the ceasefire in eastern Ukraine, the U.S. Treasury Department on Friday announced a new round of sanctions against Russia, targeting Russia's largest bank Sberbank, which accounts for approximately one-quarter of Russian banking assets and one-third of its banking capital.

The U.S. Treasury Department also deepened existing sanctions on other Russian financial institutions, expanded sanctions on Russia's energy sector, and increased the number of sanctioned Russian entities in the energy and defense sectors.

Treasury Secretary Jacob Lew said Russia continues to try to destabilize eastern Ukraine and subsequently determined that persons operating within Russia's defense and related materiel sector may now be subject to targeted sanctions.

Oil traded higher for much of the day amid worries over a possible supply disruption from Russia and some positive economic data out of the U.S. with retail sales in August rising in line with estimates and a better than expected improvement in consumer confidence.

U.S. President Barack Obama said Thursday the U.S. would launch air strikes on jihadists in Iraq and Syria. Meanwhile, Russia has warned that air strikes against ISIS without a U.N. mandate would be a violation of international law.

Light Sweet Crude Oil futures for October delivery, the most actively traded contract, dropped $0.56 or 0.6 percent to close at $92.27 a barrel on the New York Mercantile Exchange Friday.

Crude prices for October delivery scaled a high of $93.67 a barrel intraday and a low of $92.15.

Oil prices tumbled early Thursday after the International Energy Agency cut its global oil demand forecast for the year, close on the heels of OPEC's downward revision in demand forecast. However, oil rebounded as supply concerns resurfaced after European Union announced a fresh round of sanctions on Russia for its involvement in the Ukraine issue.

On Thursday, crude oil futures ended at $92.83 a barrel, up $1.16 or 1.3 percent, after having plunged to a 17-month low of $90.43 a barrel earlier in the day.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 84.16 on Friday, down from its previous close of 84.27 late Thursday in North American trade. The dollar scaled a high of 84.41 intraday and a low of 84.08.

The euro trended higher against the dollar at $1.2955 on Friday, as compared to its previous close of $1.2925 late Thursday in North American trade. The euro scaled a high of $1.2979 intraday and a low of $1.2910.

In economic news from the U.S., a report from the Commerce Department showed retail sales to have risen 0.6 percent in August, following an upwardly revised 0.3 percent increase in July. This was in line with expectations.

A report from the U.S. Labor Department showed import prices to have declined by a less than expected 0.9 percent in August. The consensus estimates were for a decline of 1 percent. Export prices dropped 0.5 percent, against expectations for a 0.1 percent decline.

U.S. consumer sentiment reported a bigger than expected score of 84.6 for September, the best since July 2013, a report from Thomson Reuters and the University of Michigan showed. The final August reading came in at 82.5.

Meanwhile, business inventories in the U.S increased in line with economist estimates in the month of July, rising 0.4 percent, according to the Commerce Department.

In economic news from the eurozone, employment rose 0.2 percent in the second quarter, after increasing 0.1 percent in the previous quarter. Year-on-year, employment grew 0.4 percent, faster than the 0.1 percent rise in the first quarter.

Meanwhile, Russia's central bank left its key interest rate unchanged at 8 percent, with inflation staying high due to the severe economic sanctions.