Oil Futures Settle Sharply Lower

Crude oil futures failed to hold early gains and settled lower on Friday as worries about the outlook for energy demand weighed on prices.

Oil prices advanced earlier in the session amid speculation OPEC producers will announce an output cut after their meeting on October 5.

However, due to concerns about the outlook for energy demand amid fears of a possible global recession, oil prices retreated as the session progressed.

West Texas Intermediate Crude oil futures for November ended lower by $1.74 or about 2.1% at $79.49 a barrel.

WTI crude futures gained nearly 1% in the week. WTI futures shed about 12.5% in the month of September, and lost as much as 24% in the third quarter.

Brent crude futures settled lower by $2.04 or about 2.3% at $85.14 a barrel. The contract shed about 1.2% in the week, lost 11% in the month, and drifted down 0.26% in the July - September quarter.

The market reacted to data showing the Fed's preferred inflation indicator, the Personal Consumption Expenditure index, surged 6.2% in the year to August after rising 6.3% in the 12 months to July.

The Commerce Department's report also showed the annual rate of core consumer price growth accelerated to 4.9% in August from a revised 4.7% in July.

Economists had expected the annual rate of growth in core consumer prices, which exclude food and energy prices, to tick up to 4.7% from the 4.6% originally reported for the previous month.

Meanwhile, the University of Michigan released a separate report showing one-year inflation expectations edged down to 4.7% in September from 4.8% in August, hitting the lowest level since last September.

A report from MNI Indicators showed an unexpected contraction in Chicago-area business activity in the month of September.

The Organization of the Petroleum Exporting Countries and allies, a group known as OPEC+, is scheduled to meet next week. It is expected that the group will agree to cut crude output in order to support falling prices.

At the previous meeting, OPEC+ reversed the 100,000-barrels-per-day increase for September and returned the October quota to the levels from August.

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