Investing.com -- U.S. crude futures fell sharply on Friday extending recent losses, as a slight increase in domestic oil rigs last week failed to offset bearish reports of record global stockpiles from the International Energy Agency.
On the New York Mercantile Exchange, WTI crude for December delivery traded between a range of $40.23 and $42.20 a barrel before settling at $40.70, down 1.08 or 2.57% on the day. For the majority of Friday's session, the front month contract for U.S. crude traded below $41 a barrel after slipping to its lowest level since late-August. The price for WTI crude is now approaching a six-and-a-half year low from Aug. 24 when U.S. crude futures traded at $37.75 a barrel. For the week, Texas Long Sweet futures fell by nearly 9% after closing down in four of five sessions. U.S. crude is also down by more than 16% since peaking above $48 a barrel in the middle of last week.
On the Intercontinental Exchange (ICE), brent crude for January delivery wavered between $44.16 and $45.45 before closing at 44.39, down 0.78 or 1.73% on the session. North Brent Sea crude is also in the midst of an extended slide after closing down on Friday for the seventh time in the last eight sessions. Over the last eight days of trading, brent futures have lost nearly 13% in value.
On Friday afternoon, oil services firm Baker Hughes (N:BHI) said in its weekly rig count that U.S. oil rigs increased by two to 574 last week for the week ending on Nov. 6. It marked the first build in domestic oil rigs in nearly three months. The U.S. oil rig count is still considerably below its level from last fall when it peaked at above 1,600.
Severe reductions in rig count levels typically provide indications that production could be on the verge of falling sharply.
The modest gains, however, failed to outweigh further signals from the International Energy Agency (IEA) of growing oversupply throughout the world. In its monthly report for October, the Paris-based IEA said global crude inventories have soared to nearly 3 billion barrels, amid record supply in Iraq, Russia and Saudi Arabia. The IEA also forecasts that non-OPEC supply will decline by 600,000 per day in 2016, as U.S. shale producers struggle to maintain output at lower prices. At such a rate, non-OPEC production could decline by its highest amount in more than two decades.
Crude prices have fallen more than 45% over the last year since OPEC roiled global markets with its decision to leave its production ceiling above 30 million barrels per day in an effort to maintain market share. Any major declines in U.S. shale production could provide signals that OPEC's strategy is prevailing.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, stood at 99.13 in U.S. afternoon trading, up 0.57% on the session. The index remained near seven-month highs from Monday's session. Dollar-denominated commodities such as crude become more expensive for foreign purchasers when the dollar appreciates.