Brent crude prices inched up a penny on Friday, fading late as a tumble in consumer sentiment offset the lift provided by rising equities markets and data showing higher US retail sales in July. US crude fell back and ended the day lower and both Brent and US contracts posted their third straight weekly losses.
US consumer sentiment fell sharply in early August, to the lowest index level since 1980, even though retail sales posted their biggest gains in three months in July, separate reports showed. The consumer gloom caused US and European equities markets to briefly pare gains after receiving a lift from the promising retail sales data.
"The consumer sentiment just took the wind out of crude's sails," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut. "(US) crude is trying to get back into the $85-$115 range it had been in most of the year." ICE Brent crude for September edged up 1 cent to settle at $108.03 a barrel, after swinging from a $106.86 low to the week's high of $109.16. Brent's lost 1.23 percent for the week.
US September crude fell 34 cents to settle at $85.38 a barrel, after gyrating from $84.02 to $87.37. The loss on the week was 1.73 percent. US crude's Relative Strength Index, at 37.46, remained above the 30 threshold that signifies oversold conditions, having dipped below that level earlier in the week. Brent's premium to US crude stood at $22.49 a barrel, below the record $26.08 posted intraday on Tuesday.
Tepid trading volumes may have indicated the uncertainty in the market, with Brent and US volumes under 600,000 in post-settlement trading. US volumes were lowest since late July when the debt-limit fight in Congress was stalling trading. US gasoline slipped and heating oil futures rose slightly, though gasoline's boost was tempered as Irving Oil Ltd said its New Brunswick, Canada refinery operations had returned to normal after a "minor upset" on Thursday. Also supportive to oil along with equities and better retail sales was the possibility that storms could form from low pressure systems being eyed by weather forecasters and energy investors.
The US National Hurricane Center tracked four low-pressure systems in the Atlantic and said one had a 60 percent chance of forming a tropical cyclone in the next 48 hours. Oil futures and equities markets were buffeted this week, starting when trading resumed after the downgrade of the US credit rating by Standard & Poor's late last Friday.
Monday's market swoons were followed by volatile trajectories on Tuesday when the US Federal Reserve noted weaker economic growth and promised to keep benchmark interest rates near zero through mid-2013. Then weekly oil inventory reports from industry and government showed a surprise and sharp drop in US crude stockpiles and slips in refined product stocks, supporting oil prices.
"There seems to be a little bit of confidence coming back in after the falls earlier in the week although it looks like there will still be a bit of volatility," said Simon Wardell, an oil analyst at IHS Global Insight. "Some people were concerned about a possible double-dip recession but no one is suggesting we will see the sort of contraction in oil demand like that we saw in 2008 and 2009."