Oil prices fell on Friday, snapping a string of seven straight higher settlements, as the euro zone debt crisis brought economic concerns back in focus and strengthened the dollar. Brent and US crude futures still posted weekly gains of more than 4 percent, with both contracts touching eight-week peaks on Thursday.
US and European equities slid and the euro weakened broadly after Spain's heavily indebted Valencia region called for aid, increasing investor fears that the Spanish government is moving toward a full-blown bailout. "The dollar spiking higher versus the euro on Spain banks needing help pushed oil lower. Some geopolitical fatigue seemed to emerge as well, with the rumours about Assad taking a deal. Looks like if he goes we will get a selloff," said John Kilduff, partner at Again Capital LLC in New York. Syria's Information Ministry said comments by Russia's ambassador to France that President Bashar al-Assad had accepted leaving power in an orderly way were "completely devoid of truth."
Fighting raged as government troops battled rebels at border posts and in corpse-strewn streets in Damascus after a fourth member of Assad's inner circle died from wounds sustained in a bomb attack this week. Brent September crude fell 97 cents to settle at $106.83 a barrel, after falling as low as $105.60 intraday.
Front-month Brent jumped 4.33 percent for the week, posting a fourth straight weekly gain and having risen 16.5 percent in the period. Expiring US August crude fell $1.22 to settle at $91.44 a barrel, off its low of $90.66. For the week, US crude rose 4.98 percent but still headed for a more than 4 percent weekly gain. US September crude fell $1.14 to settle at $91.83 a barrel.
Concerns about potential supply disruptions in the Middle East have pushed up oil prices recently as violence in Syria intensified and after a Bulgarian bus bombing killed Israeli tourists - an act Israel blamed on Iran. New York police believe Iranian Revolutionary Guards or their proxies have been involved so far this year in nine plots against Israeli or Jewish targets around the world, according to restricted police documents obtained by Reuters.
An Iranian lawmaker said just over half of Iran's parliament has backed a draft law to block the Strait of Hormuz shipping lane, reminding investors of the uncertainty involved in the West's dispute with Tehran over Iran's nuclear program. However, adding to the bearish sentiment on Friday was news that China will load full contracted volumes of Iranian oil in July after refiner Sinopec and the National Iranian Tanker Co resolved a freight dispute.
Chinese news also weighed on copper, another dollar-denominated commodity. The industrial feedstock fell more than 2 percent on the inflamed worries about the euro zone that strengthened the US currency, but also on China's warning against relaxing curbs on property speculation.