Investing.com - Crude oil futures rallied sharply on Friday, on news that Ukrainian troops destroyed a portion of a Russian column of armored vehicles, underlining fears that the conflict will escalate and disrupt crude shipments out of Russia.
Oil prices regained strength after Ukraine said its forces had attacked and partly destroyed a Russian armored convoy that entered Ukrainian territory overnight.
Separately, NATO’s secretary-general said the organization observed a Russian “incursion” into Ukraine on Thursday night, which was denied by Moscow.
Russia is one of the world's top producers and exporters of oil and gas.
On the ICE Futures Exchange in London, Brent oil for October delivery jumped 1.43%, or $1.46, to settle at $103.53 a barrel by close of trade on Friday.
A day earlier, London-traded Brent prices hit $101.91, the lowest since July 1, 2013, as global supplies were seen as ample despite ongoing violence in Ukraine and the Middle East.
Despite Friday’s gains, the October Brent contract lost 1.86%, or $1.97, on the week.
Elsewhere, on the New York Mercantile Exchange, crude oil for delivery in September surged 1.85%, or $1.77, to end the week at $97.35 a barrel by close of trade on Friday.
On Thursday, New York-traded oil prices slumped to $95.26 a barrel, the weakest level since January 27. For the week, Nymex oil futures dipped 0.3%, or 30 cents.
Meanwhile the spread between the Brent and the WTI crude contracts stood at $6.18 a barrel by close of trade on Friday, compared to $7.37 in the preceding week.
Geopolitical events in Eastern Europe offset otherwise bearish data out of the U.S. on Friday.
The preliminary Thomson Reuters/University of Michigan consumer sentiment index ticked down to a nine-month low of 79.2 in August from 81.8 in July. Analysts had expected the index to rise to 82.5 this month.
Meanwhile, the New York Federal Reserve said that its Empire State manufacturing index fell to a four-month low of 14.69 this month, from a reading of 25.60 in July, worse than expectations for a decline to 20.0.
Also Friday, the Federal Reserve said U.S. industrial production rose 0.4% in July, beating expectations for a 0.3% gain.
A separate report showed that U.S. producer price inflation rose 0.1% on year last month, in line with expectations. Core producer price inflation, which excludes food, energy and trade, rose 0.2% in July, also in line with market projections.
In the week ahead, investors will be anticipating an annual meeting of top central bank officials and economists in Jackson Hole, Wyoming from August 21 to 23.
The spotlight will be on Fed Chair Janet Yellen, who will speak on Friday in her first appearance at Jackson Hole as head of the U.S. central bank.
Market watchers will also pay close attention to the minutes of the Fed’s July policy meeting due to be published on Wednesday for further clues about the timing of future interest rate hikes.
Data from the Commodities Futures Trading Commission released Friday showed that hedge funds and money managers decreased their bullish bets in New York-traded oil futures in the week ending August 12.
Net longs totaled 218,814 contracts as of last week, down 7.4% from net longs of 236,381 in the preceding week.