Forexpros - Crude oil prices were modestly lower on Friday, capping a tumultuous and volatile week for crude futures, as markets continued to asses the economic outlook of the world's largest oil consumer.
On the New York Mercantile Exchange, light sweet crude futures for delivery in September traded at USD85.69 a barrel by close of trade on Friday, slumping 1.6% over the week, its third consecutive weekly decline.
Crude prices tumbled almost 6% on Monday, as market sentiment was rattled after ratings agency Standard and Poor's downgraded the U.S. sovereign debt rating by one notch to AA+ from AAA after markets closed last Friday.
The ratings agency kept the rating outlook at negative, suggesting a further downgrade could be possible within the next 12 to 18 months.
The downgrade prompted investors to shun riskier assets, such as stocks and high yielding currencies, and flock to traditional safe haven assets like the yen, Swiss franc and gold.
Crude prices extended losses on Tuesday, falling to as low as USD75.72 a barrel, the lowest since September, low as mounting fears over the global economic recovery weighed on future oil demand expectations.
But prices rebounded after the Federal Reserve pledged to keep its benchmark interest rate at an all-time low until "at least through mid-2013."
The Fed also indicated that it "discussed the range of policy tools available to promote a strong economic outlook recovery in a context of price stability" and said it was prepared to employ the tools "as appropriate".
The statement fueled speculation the central bank may embark on a third round of quantitative easing, after the second round of bond purchases concluded at the end of June.
Meanwhile, official data released Wednesday showed that U.S. crude supplies fell by 5.2 million barrels last week, the biggest decline since the week ended December 17.
Total motor gasoline inventories decreased by 1.6 million barrels, confounding expectations for a 0.9 million barrel increase.
Crude prices advanced nearly 4.8% on Thursday after a government report showed that U.S. first time jobless claims fell to a four-month low in the preceding week.
Oil traders have been paying close attention to readings on U.S. employment levels for signs that people are returning to work, thus driving more and using more energy.
On Friday, government data showed that U.S. retail sales rose 0.5% in July, the biggest gain in four months.
However, concerns over the U.S. economic outlook remained after the University of Michigan's preliminary index of consumer sentiment plunged to a three-decade low in August.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for September delivery traded at USD107.61 a barrel by close of trade on Friday, shedding 0.6% on the week and up USD21.92 on its U.S. counterpart.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
