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 USD96.47 a barrel by close of trade on Friday. Prices hit a session high of USD96.55 a barrel earlier in the day, the strongest level since May 11.
For the week, October crude oil futures jumped 3.1%, the third consecutive weekly advance.
Data on Friday showed that the University of Michigan’s consumer sentiment index for August hit its highest level in three months, coming in at 73.6 from 72.3 in July and outstripping forecasts for a reading of 72.4.
Meanwhile, the Conference Board reported that its index of leading indicators rose more-than-expected in July.
The data came after better-than-expected U.S. retail sales and industrial production data earlier in the week, which eased fears over the health of the U.S. economy.
Weekly data from the U.S. Energy Department showed that oil demand in the U.S. remains strong. Crude oil inventories fell by a larger-than-expected 3.7 million barrels last week to hit a four-month low of 366.2 million barrels.
The U.S. is the world’s biggest oil consuming country, responsible for almost 22% of global oil demand.
Oil prices drew additional support from comments by German Chancellor Angela Merkel, who said Thursday that Germany was “in line” with the European Central Bank on defending the single currency.
The comments fuelled expectations that the ECB will soon act to lower Spanish and Italian borrowing costs.
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.
Elsewhere, hopes of near-term easing in China mounted after Chinese Premier Wen Jiabao said earlier in the week that slowing inflation provides “growing room for monetary policy operation” to spur growth in the world’s second largest economy.
The remarks 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 People’s Bank of China has lowered both twice so far this year in an effort to boost lending and stimulate growth.
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 nearly 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 USD115.40 a barrel on Thursday, the highest since May 4.
The London-traded Brent contract added 0.3% over the week, with the spread between the Brent and the crude contracts standing at USD17.26 a barrel by close of trade Friday.
Brent prices came under pressure Friday after Reuters reported that the White House was considering a plan to potentially release oil from the Strategic Petroleum Reserve.
Prices came off the lows of the session, however, as investors turned skeptical that such a move would come to fruition ahead of the U.S. Presidential Election in November.
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 week ahead, market participants will be awaiting Wednesday’s minutes of the Federal Reserves August meeting for any indications on the future possible direction of monetary policy.
The U.S. is also to release closely watched reports on the housing sector and manufacturing production.
Elsewhere, the euro zone is to release monthly data on manufacturing and service sector activity, while the U.K. is to produce revised data on second quarter growth.
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