2013.08.2316:13:00UTC+00Crude Oil Surges To End Above $106

U.S. crude oil ended sharply higher Friday, as the dollar weakened against a basket of major currencies after new home sales in the U.S. declined more than expected in July, even as investors look forward to increased demand for oil following some better-than-expected manufacturing activity data out of China.

A more than expected drop in U.S. commercial crude inventories indicated by the official U.S. Energy Information Administration earlier in the week also supported the uptrend in oil prices. Fresh developments in Egypt and Syria have also impacted investor sentiments with supply concerns, as the Suez Canal skirting Egypt is a major oil supply route.

Nonetheless, oil prices shed nearly one percent for the week.

Light Sweet Crude Oil futures for October delivery, the most actively traded contract, jumped $1.39 or 1.3 percent to close at $106.42 a barrel on the New York Mercantile Exchange Friday.

Crude prices for October delivery scaled a high of $106.94 a barrel intraday and a low of $104.30.

Yesterday, oil gained over 1 percent to recover from a two-week low after some better-than-expected manufacturing activity data from China improved demand growth outlook for oil and further supported by official data Wednesday that showed crude inventories in the U.S. to have declined more than expected last week.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 81.36 on Friday, down from 81.48 late Thursday in North American trade. The dollar scaled a high of 81.66 intraday and a low of 81.22.

The euro traded higher against the dollar at $1.3385 on Friday, as compared to $1.3356 late Thursday in North America. The euro scaled a high of $1.3410 intraday and a low of $1.3334.

In economic news from the U.S., the Commerce Department said new home sales tumbled 13.4 percent to an annual rate of 394,000 in July from the revised June rate of 455,000. Economists had been expecting new home sales to edge down to an annual rate of 487,000 from the 497,000 originally reported for the previous month.

From the eurozone, Germany confirmed its robust recovery during the second quarter, with domestic spending and investment boosting growth to the fastest pace since the start of 2012. The economy expanded as initially estimated by 0.7 percent in the second quarter from the previous three-month period, detailed results from Destatis showed. This was the biggest increase since the first quarter of 2012.

Meanwhile, the U.K. economy expanded at a faster than initially estimated pace in the second quarter due to an upward revision in construction output, data from the Office for National Statistics showed. Gross domestic product grew 0.7 percent in the second quarter from a quarter ago, up from the prior estimate of 0.6 percent.