The oil complex settled lower Friday after a ceasefire agreement in Ukraine helped minimize the oil market's risk premium, while concerns remain over the impact of Russian sanctions on European demand.
NYMEX October crude closed $1.16/barrel lower at $93.29/b. ICE October Brent crude was down $1.01/b to $100.82/b.
Refined products futures also ended the day lower. NYMEX October RBOB was down 1.65 cents to $2.5834/gal, while October ULSD was down 1.71 cents to $2.8192/gal.
Phil Flynn, senior market analyst at Price Futures Group, said the market turned lower when US President Barack Obama told reporters at the NATO summit in Wales that Western sanctions against Russia would remain in place, despite the ceasefire.
Sanctions threaten to weaken the European economy and hence demand for petroleum products considering the Continent's close commercial ties with Russia, he said.
Before Obama's televised speech, it had been believed sanctions might be removed once the two sides agreed to stop fighting, Flynn said.
"The situation could change over the weekend, if more progress is made and the ceasefire holds, then maybe next week we could be talking about lifting sanctions," Flynn said.
Ukraine and Moscow-backed rebels pledged to stop fighting Friday during talks held in the Belarusian capital of Minsk, offering the first sign of an end to the five-month long campaign.
The possible cessation of violence comes against a backdrop of simmering tension. Just hours before the agreement was announced, fighting had reportedly spread to Mariupol, a strategic city located on the Sea of Azov.
Even with a ceasefire agreement in place, Russian-backed insurgents are maintaining their demand to split away from Ukraine, AFP reported.
"People are viewing the cease-fire as bearish, which probably makes sense," said Bill O'Grady, chief market strategist at Confluence Investment Management. "To some extent, there wasn't any disruption from the conflict, but there is always the potential something could happen."
Another factor Friday contributing to crude's slide was a weaker-then-expected US jobs report. Non-farm payrolls increased by 142,000 jobs in August, Labor Department data showed. Analysts had expected a larger addition of 230,000 jobs.
Regarding supply, October loadings for Forties crude increased 47,000 b/d to 367,742 b/d, according to a copy of the loading schedule seen by Platts Friday (See story, 1304 GMT).
The Atlantic basin is already awash with crude, helping keep a lid on prices. Forties crude contributes the largest stream underpinning the ICE Brent futures contract.
