Elsewhere, London-traded Brent prices dropped more than 1% on talk of a possible release of U.S. strategic petroleum reserves.
On the New York Mercantile Exchange, light sweet crude futures for delivery in October settled at USD96.09 a barrel by close of trade on Friday. For the week, October crude oil futures shed 0.9%, the first weekly decline in four weeks.
Crude oil prices dipped slightly in choppy trade Friday after German Chancellor Angela Merkel rejected Greek pleas for an extension to its economic reform program, renewing concerns over a possible Greek exit from the region.
Following talks with Greek Prime Minister Antonis Samaras, Chancellor Merkel said it was up to Greece to show that it could implement the austerity measures agreed with its international creditors, but reiterated that the country should stay in the euro zone.
Oil traders pay close attention to developments surrounding the euro zone’s debt woes, amid worries that the region’s sovereign debt crisis could trigger a broader economic slowdown that would curb demand for oil.
Losses were limited as market participants monitored tropical storm activity in the Gulf of Mexico, amid concerns over a disruption to supplies from the region.
The U.S. National Hurricane Center said Friday Tropical Storm Isaac was moving northwest through the eastern Caribbean Sea, with forecast tracks showing the storm heading into the Gulf of Mexico early Monday, with possible landfall Wednesday.
Oil giant British Petroleum said it was shutting production at its Thunder Horse oil and gas platform in the Gulf of Mexico, the world's largest, in preparations for the storm.
Energy traders track tropical storm activity in the event it disrupts production in the Gulf of Mexico, which is home to 23% of U.S. oil production.
Prices hit USD98.28 a barrel on Thursday, the highest since May 4, amid growing hopes policymakers in the U.S., Europe and China will introduce fresh easing measures to boost growth their respective economies.
Wednesday’s minutes of the Federal Reserve’s August meeting showed that “many members” think additional easing may be warranted "fairly soon" unless there is evidence of a "substantial and sustainable" strengthening in the economic recovery.
In addition, Fed Chairman Ben Bernanke told a congressional oversight panel on Friday that the U.S. central bank has room to deliver additional monetary stimulus to boost the U.S. economy.
The U.S. is the world’s biggest oil consuming country, responsible for almost 22% of global oil demand.
Oil prices also drew support from mounting expectations that the European Central Bank will implement policy measures to help stabilize the euro zone's sovereign debt markets at its next policy meeting in early September.
Elsewhere, hopes of near-term easing in China mounted after data released Thursday showed that China’s HSBC Flash Purchasing Managers Index fell to a nine-month low of 47.8 in August from a final reading of 49.3 in July, as new orders slumped in the face of weakening global demand.
The disappointing data added to ongoing speculation policymakers in Beijing will cut banks’ reserve requirements or benchmark interest rates again after inflation cooled to a 30-month low in July.
The Asian nation is the world’s second largest oil consumer behind the U.S. and has been the engine of strengthening demand.
Despite the gloomy global outlook, oil markets have been bullish lately, with New York-traded crude prices up approximately 20% since touching a low of USD77.27 a barrel on June 28.
Prices have been well-supported amid growing expectations that central banks around the world will soon announce fresh stimulus measures to help spur weak global growth.
Renewed fears over escalating violence in Syria and lingering tensions between Iran and the West have also been supporting prices in recent weeks.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for October delivery settled at USD113.73 a barrel by close of trade on Friday. Prices touched USD116.38 a barrel on Thursday, the highest since May 3.
The London-traded Brent contract shed 0.2% over the week, with the spread between the Brent and the crude contracts standing at USD17.64 a barrel by close of trade Friday.
Brent prices came under pressure Friday, losing 1.3% after reports surfaced that the International Energy Agency was likely to tap strategic oil reserves as soon as September.
Brent prices have been well-supported in recent weeks, rallying nearly 22% from the lows touched in June, amid growing concerns over tightening supplies from the North Sea region and following the launch of Western-led sanctions targeting Iranian oil exports on July 1.
In the coming week investors will be looking ahead to a speech by Federal Reserve Chairman Ben Bernanke at an annual symposium in Jackson Hole, Wyoming at the end of the week, amid ongoing speculation over how close the U.S. central bank is to implementing more stimulus measures.
In addition, the U.S. is to release revised data on second quarter economic growth, while Italy is to hold an auction of 10-year governments bonds, in what will be an important test of investor appetite for the country’s debt.
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