Investing.com -- Crude plummeted on Friday as WTI futures closed below $60 for the first time in nine sessions, amid a dwindling U.S. rig count and bearish strategic positioning from Saudi Arabia's energy minister.
On the New York Mercantile Exchange, WTI crude for August delivery plunged 0.88 or 1.44% to 59.95 a barrel. Texas Long Sweet futures traded in a tight range between 59.25 and a peak of 60.90. For the week, WTI crude declined more than 0.75% falling back slightly after surging 1.50% in the week ending June 12.
On the Intercontinental Exchange (ICE), brent crude for August delivery fell 1.23 or 1.91% to 63.03 a barrel. Brent crude also fell for the week, plunging more than 2.5% from its level at Monday's open. The spread between the international and U.S. domestic benchmarks of crude stood at $3.08, slightly below its level of $3.25 on Friday morning.
In U.S. afternoon trading, crude prices extended earlier losses after oil services firm Baker Hughes (NYSE:BHI) said the U.S. oil rig count fell by four last week to 631, marking the 28th consecutive week of weekly declines. U.S. oil rigs are now at their lowest level since August, 2010. The pace of decline, though, continues to slow as last week's draw represented the smallest reduction since December.
Industry observers have placed less emphasis on U.S. rig counts in comparison with recent years, as U.S. shale producers continue to remove inefficient rigs while maintaining output. A controversial decision by Opec in November to keep its supply ceiling above 30 million barrels per day triggered an arms race of sorts with the U.S. for global market share.
On Thursday, Saudi Arabia oil minister Ali Al-Naimi said in St. Petersburg that his country has roughly 1.5 million-2 million barrels of daily reserves and is ready to increase production if demand rises.
While U.S. crude production has touched record levels throughout 2015, the Energy Information Administration expects it to level off in the second half of the year. In its Short-Term Energy Outlook released last month, the EIA projects U.S. output to average 9.4 million barrels per day in 2015, before declining to 9.3 million bpd for 2016. A spike in crude prices is beneficial for shale producers due to its high marginal costs.
The U.S. Dollar Index, which measures the strength of the dollar versus a basket of six other major currencies, reached a session-high of 94.70 in U.S. morning trading before falling slightly back to 94.39, up 0.20%. Dollar-denominated commodities such as crude become more expensive for foreign purchasers when the dollar appreciates. The dollar moved higher on Friday, as traders continued to digest dovish comments from Federal Reserve chair Janet Yellen earlier this week.
Federal Reserve Bank of San Francisco president John Williams reiterated that an interest rate hike could be appropriate in 2015, while adding that waiting too long for lift-off could pose added risk. The remarks were the first public comments by a Fed governor since the Federal Open Market Committee opted not to issue any definitive wording on the timing of a rate hike on Wednesday.