Crude oil prices posted their second straight monthly losses, despite rising on Friday on worries that the intensifying Ukraine crisis may bring more sanctions and as US data portended strong demand in the world's largest oil consumer. US crude oil rose for a fourth straight session after data showed consumer confidence rose in August to a seven-year high, although consumer spending dipped by 0.1 percent.
The Institute for Supply Management-Chicago said its business barometer shot up to 64.3 this month from 52.6 in July. It was the index's biggest monthly point gain since July 1983 and pointed to continued strength in the manufacturing sector "The strong data in Chicago manufacturing is making people think that there could be something going on that will show up in demand numbers shortly," said Phil Flynn, an analyst at Price Futures Group in Chicago, Illinois.
Brent crude oil rose after the government in Kiev said Russian troops had entered Ukraine in support of pro-Moscow rebels, intensifying a separatist war and prompting alarm among Kiev's Western allies, as well as fears of new sanctions that could target Russia's energy sector. Russia is Europe's biggest supplier of oil, coal and natural gas, meeting around a third of demand for all those fuels, according to EU data. It receives in return some $250 billion a year, or around two-thirds of government revenue. Brent for October delivery rose 73 cents to settle at $103.19 a barrel, while US crude gained $1.41 to $95.96 a barrel.
US crude's discount to Brent narrowed to $7.23 a barrel, having touched $7.19, the smallest amount in two weeks and nearly $2 narrower than Thursday's $9.15. Both benchmarks pushed higher towards the end of the trading session, ahead of a long holiday Labour Day weekend in the United States. The October contract's premium to September fell as low as 43 cents intraday on Thursday, reacting to a fire at BP's 413,500 barrel-per-day Whiting, Indiana, refinery, but had increased to as much as 96 cents intraday on Friday.
"It's war premium, because if you're trading do you want to trade on a refinery problem that may last a few weeks or the possibility of war?" said a New York-based futures broker. Even after Friday's increases, oil prices on both sides of the Atlantic registered their second straight month of losses with Brent down 2.8 percent and US crude falling 2.3 percent in August.
The European benchmark oil contract had plunged more than 12 percent from a nine-month high in June to a 14-month low last week as weak demand led to an oil supply glut. Analysts said a suspension of Russian oil exports remained improbable despite the crisis. West African crude exports to Asia were near record levels in September, a Reuters survey of traders showed, and the North Sea market remained well supplied. Production from the Organisation of the Petroleum Exporting Countries (Opec) rose, despite conflicts in Iraq and Libya. Opec, which supplies a third of the world's oil, raised its output in August from July, with higher supply from Libya, Angola and Iran, a Reuters survey found.
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