U.S. crude oil plummeted to settle at a two-month low Friday, on demand growth concerns after some weak manufacturing data out of China, the world's second largest energy user. Oil prices were also impacted as the dollar strengthened against some major currencies, while the euro continued to slip after some disappointing data from the eurozone.

Investors also fretted over the U.S. spending cuts effective Friday after failure of the sequester talks between the Obama administration and Republicans.

Oil shed more than two percent for the week.

China's official purchasing managers' index slipped to 50.1 in February from 50.4 in January, falling for a second consecutive month, a survey report from the China Federation of Logistics and Purchasing and the National Bureau of Statistics showed.

Light Sweet Crude Oil futures for April delivery, the most actively traded contract, dropped $1.37 or 1.5 percent, to close at $90.68 a barrel on the New York Mercantile Exchange Friday.

Crude prices for April delivery scaled a high of $91.97 a barrel intraday and a low of $90.04.

For the week, oil dropped 2.6 percent.

Yesterday, oil settled lower on a strong dollar and the Energy Information Administration report which showed crude stockpiles in the U.S. to have increased last week. Concerns over the eurozone and the sequestration debate also weighed on oil prices.

The euro traded lower against the dollar at $1.3019 on Friday, as compared to $1.3057 late Thursday in North America. The euro scaled a high of $1.3101 intraday and a low of $1.2968.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 82.31 on Friday, up from 81.94 late Thursday in North American trade. The dollar scaled a high of 82.51 intraday and a low of 81.78.

In economic news from the U.S., a report from the Commerce Department revealed personal income to have tumbled by 3.6 percent in January after surging up by 2.6 percent in December. Economists expected income to pull back by about 2.1 percent. Meanwhile, personal spending edged up by 0.2 percent in January after inching up 0.1 percent in December, in line with economists' expectations.

Consumer sentiment in the U.S. improved more than initially estimated in February, a Thomson Reuters and the University of Michigan report showed. The final reading on the consumer sentiment index for February came in at 77.6 compared to the mid-month reading of 76.3. Economists expected the index to be downwardly revised to 76.0.

Economic activity in the U.S. manufacturing sector expanded for the third consecutive month in February, the Institute for Supply Management said Friday. The index of activity in the sector unexpectedly rose to its highest level in over a year and a half. The ISM purchasing managers index rose to 54.2 in February from 53.1 in January, with a reading above 50 indicative of growth in the manufacturing sector. Economists expected the index to edge down to 52.8.

Elsewhere, eurozone inflation slowed more than expected in February, to the central bank's 'below, but close to 2 percent' target, flash estimate from Eurostat showed. Inflation eased to 1.8 percent, from 2 percent in January. The rate was expected to slow to 1.9 percent.

Meanwhile, unemployment rate in Eurozone rose to a new record high in January, the latest figures from Eurostat showed. The seasonally adjusted unemployment rate rose to 11.9 percent in January from an upwardly revised 11.8 percent in December. Economists had forecast the rate to rise to 11.8 percent from December's originally estimated 11.7 percent rate.

German retail sales in January recovered at the fastest pace in 6 years, suggesting that consumer spending bolstered domestic demand and economic rebound at the start of the year. Real retail sales rose 3.1 percent in January from the previous month when they were down 2.1 percent, data from the Federal Statistical Office showed.