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US oil ends month on a high note, yet still in the red

Pump jacks in an oil field over the Monterey Shale formation near Lost Hills, Calif.
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Pump jacks in an oil field over the Monterey Shale formation near Lost Hills, Calif.

Crude oil prices notched a second straight month of losses, despite rising on Friday amid worries that the intensifying Ukraine crisis may bring more sanctions, and as U.S. data portended strong demand in the world's largest oil consumer.

U.S. 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

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.

Even after Friday's increases, oil prices on both sides of the Atlantic were on track for their second straight monthly losses, of around 3 percent for 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.

Brent crude for October delivery rose 70 cents to above $103 a barrel, and U.S. crude gained $1.41 to end the session at $95.96 a barrel. U.S. crude's discount to Brent narrowed to $7.66 a barrel, having touched $7.44, the smallest amount in two weeks.

The main cause for the recent fall in oil prices is that weakening demand is being met by rising production. Yet analysts expect oil prices to strengthen if the situation in Ukraine worsens.

--By Reuters

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