NEW YORK (Reuters) - Oil prices tumbled on Friday, with U.S. crude falling 5 percent, after a selloff in Wall Street equities offset positive impact to crude from a third weekly decline in the U.S. oil rig count.
A rise in the dollar, fears that OPEC oil production will not slow and reduced political tensions in the Middle East from U.S-Russia talks on Syria also weighed on oil.[USD/]
Oil services firm Baker Hughes's report on the weekly U.S. oil rig count showed a drop of eight rigs this week. It was the third weekly decline in the rig count, a sign that the renewed decline in crude prices since July may be slowing some drillers from returning to the well pad in a bigger way.
U.S. crude futures, already down 3 percent when the Baker Hughes report came out, pared losses just briefly on the news.
"The industry is getting so much more production from new technology that a decline in working rigs doesn't mean nearly as much as it used to," said David Thompson at Powerhouse, a commodities broker in Washington specializing in energy.
"The rig statistics will vary from week to week on impact, but I'm not sure I would attach a huge significance solely on a drop in the rig count," he added.
As oil markets neared settlement, they began a sharp descend. The dollar rebounded from a 3-week hit earlier in the day after a Federal Reserve decision to keep interest rates unchanged. Wall Street's key S&P 500 stock index (.SPX) headed for their biggest rout in over a week after the Fed decision. [.N]
U.S. crude futures's front-month (CLc1) settled down $2.22, or 4.8 percent, at $44.68 a barrel.
The front-month in Brent (LCOc1), the global oil benchmark, settled down $1.61, or 3.3 percent, at $47.47.
Gasoline (RBc1) fell 1.4 percent, while ultralow-sulfur diesel (HOc1) slumped 2.5 percent in an extended selloff across the petroleum complex.
Oil was down early from early in the day after OPEC member Kuwait said it would take time for the oil market to balance, indicating that the producer group would continue defending market share over production cuts to bolster prices.
Other OPEC sources said they expect oil to rise no more than $5 a barrel a year to reach $80 by 2020.
Iran's deputy oil minister Rokneddin Javadi, meanwhile, reiterated Iran's plans to regain its oil production share once nuclear-related sanctions are removed against Tehran, adding that new oil contracts would be unveiled in coming weeks.
REUTERS
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