Crude Oil Settles Below $105; Sheds 3.3% For Week

(RTTNews) - U.S. crude oil plunged to end at a one-month low Friday, on easing supply concerns with Syria situation improving and some thawing in relations with Iran, even as Libyan crude production is expected to be normalized soon. Oil prices were also impacted over possibilities the Federal Reserve could scale down its $85 billion bond-buying program after its October meeting.

Investors weighed prospects of a possible scale down to the Fed's stimulus program in October, after St. Louis Fed President James Bullard indicated the central bank could scale down its asset purchase program at its next meeting if the economy showed significant signs of recovery, with focus on jobs.

The Federal Reserve on Wednesday decided against tapering its massive bond-buying program, which has been in place since September last. The Federal Open Market Committee opted to continue its support program after a disappointing August jobs report that raised concerns about the pace of U.S. economic recovery.

Light Sweet Crude Oil futures for October delivery, the most actively traded contract, plummeted $1.72 or 1.6 percent to close at $104.67 a barrel on the New York Mercantile Exchange Friday. It was the lowest settlement since August 21.

Crude prices for October delivery scaled a high of $106.46 a barrel intraday and a low of $104.32.

Yesterday, oil prices dropped sharply on profit taking and easing supply concerns with reports that Libyan output is expected to increase shortly, even as crude oil inventories in the U.S. dropped much more than expected last week.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 80.43 on Friday, up from 80.35 late Thursday in North American trade. The dollar scaled a high of 80.58 intraday and a low of 80.30.

The euro traded slightly lower against the dollar at $1.3528 on Friday, as compared to its previous close of $1.3529 late Thursday in North America. The euro scaled a high of $1.3550 intraday and a low of $1.3500.

In economic news, the U.K. budget deficit narrowed slightly more than expected in August, suggesting that economic recovery started to usher in positive developments in public finances. Data from the Office for National Statistics on Friday showed public sector net borrowing, excluding temporary effects of financial interventions, at GBP 13.2 billion-- which is below the GBP 14.4 billion borrowing seen during the same period of last year. The deficit was expected to decline to GBP 13.3 billion.

Meanwhile, International Monetary Fund Chief Christine Lagarde said global economic growth remains subdued despite signs of recovery in the U.S., emphasizing that economies are moving at different speeds. The stake of U.S. in the global recovery is greater than ever in a world of increasing economic interconnections, Lagarde said in a speech to business leaders at the U.S. Chamber of Commerce in Washington, D.C on Thursday.

Ahead of the release of the next World Economic Outlook on October 8, Lagarde underscored the interplay between the global economy and the U.S. economy and the importance of job creation.