Investing.com -- U.S. crude futures fell sharply from near-yearly highs on Friday retreating below $50, as the domestic oil rig count moved higher for a second consecutive week providing indications that producers are ready to ramp up output.
On the New York Mercantile Exchange, WTI crude for July delivery traded between $48.87 and $50.73 a barrel before closing at $49.07, down 1.48 or 2.93% on the session. With the sharp losses, the front month contract for U.S. crude closed below $50 for the first time in four sessions.
On the Intercontinental Exchange (ICE), brent crude for August delivery wavered between $50.37 and $52.10 a barrel, before closing at $50.54, down 1.41 or 2.71% on the day. At session-highs, North Sea brent futures eclipsed the $52 level for the first time since early-October. Both the international and U.S. benchmarks of crude hovered near 11-month highs earlier this week, as a longstanding conflict in Nigeria has raged on leading to widespread slowdowns among major producers throughout the Southern delta region of the nation.
U.S. crude futures have surged more than 85% since falling to 13-year lows at $26.05 a barrel on February 11.
WTI crude extended losses on Friday afternoon after oil services firm Baker Hughes said the U.S. oil rig count increased by three for the week ending on June 3 to 328. At the same time, the gas rig count rose last week by 3 to 85 boosting the overall count up six to 414. A week earlier, Baker Hughes reported that its weekly rig count moved higher for the first time since last August, providing drillers with some optimism that a prolonged two-year downturn might be on the verge of subsiding. The rig count is still down by 445 from the same week last year.
It came days after the U.S. Energy Information Administration (EIA) reported that crude production nationwide increased by 10,000 barrels per day to 8.745 million bpd last week, halting a 4-month streak of weekly declines. Over the last year, crude output in the U.S. has plummeted by nearly 1 million bpd. At this time last year, daily production hovered around 9.6 million barrels, its highest level in more than 40 years. High-cost U.S. shale producers are able to return online when the price of oil rises exponentially.
Elsewhere, energy traders continued to closely monitor activities in Southern Nigeria, an area besieged by constant attacks of sabotage on oil facilities in the region over the last month. On Friday morning, the Niger Delta Avengers, a local militant group, claimed responsibility for an attack in the wee hours of a pipeline operated by Italy's ENI (MI:ENI). The attack on the Obi Obi Brass Pipeline, which impacted Agip's major crude oil line, marks the latest attempt by the militants to cut crude production in the area to zero.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, rose by more than 0.35% to an intraday high of 94.46. The index is still down by more than 5% since early-December.
Dollar-denominated commodities such as crude become more expensive for foreign purchasers when the dollar appreciates