ICE October Brent crude settled 97 cents lower at $97.11/barrel Friday, the lowest front-month close since late June 2012, as expectations of lower global oil demand continue to push oil futures lower.
NYMEX October crude closed 56 cents lower at $92.27/b. In refined products action, NYMEX October ULSD fell 1.56 cents to $2.7405/gal while NYMEX October RBOB slid 53 points to $2.5188/gal.
US macroeconomic data released Friday was seen as bullish for oil, but prices slid as traders continue to digest a Thursday report that revised the International Energy Agency's oil demand forecast due to weakening Chinese and European economies.
US retail sales increased 0.6% in August, on top of an upwardly revised July figure, the largest increase in four months, the US Department of Commerce said.
In addition, the Thomson Reuters/University of Michigan consumer sentiment index was up 2.1 points to 84.6 in early September, its highest level since July 2013.
The economic news could not outweigh the bearish tone of the IEA's latest demand estimate, as ICE Brent futures fell for the second day in a row.
The last time front-month ICE Brent settled lower than Friday's close was on June 28, 2012 at $91.36/b.
"The IEA report showing demand is soft is starting to hit at concerns that maybe the world economy isn't in all that good shape," Bill O'Grady, chief market strategist at Confluence Investment Management, said.
"Oil usually trades in ranges, so if this is breaking down to a new range you need a reason why. One possibility could be a big slowdown in global growth. That would do the trick," he said.
Another factor contributing to the weaker demand outlook is the role of the European Union and American sanctions on Russia, analysts say.
Close business ties between Europe and Russia could mean sanctions end up hurting the European economy, depressing oil demand in the process, they say.
On Friday, the EU and US separately announced new sanctions against Russia over Moscow's role in the Ukraine crisis.
The new sanctions will make it more difficult for state-owned Russian companies, including oil giant Rosneft, to tap Western financial markets for funding.
A senior Obama administration official told reporters the sanctions are designed to "shut down" Russia's ability to develop Arctic, deepwater and shale oil projects.
"The historical focus on geopolitical events has been looking at supply implications," Kyle Cooper, an analyst at IAF Advisors, said.
The situation in Ukraine has caused a "shift in mentality," Cooper said, as attention shifts to the impact of the Russian sanctions on oil demand, instead.
Oil futures have been declining since their recent highs in June. Front-month ICE Brent is down roughly $18/b, despite fighting continuing in eastern Ukraine during most of that time.
Western sanctions are aimed at Russian oil companies. However, the types of upstream projects impacted -- Arctic, deepwater, shale -- are still on the drawing board.
