24/07/2016 05:08 AST
Oil prices fell 2 percent on Friday, with losses accelerating after the US oil rig count rose for a fourth week in a row, putting crude on track for a weekly loss and dragging Brent to two-month lows.
Crude futures were already down as investors braced for expected growth in Iraqi crude exports that could add to the global glut.
"The oil complex is already struggling with oversupply issues. More than ample inventories and upcoming refinery turnarounds and maintenance have the bulls on the defensive," said Pete Donovan, broker at Liquidity Energy in New York.
"An increase in rigs is the last thing they need."
Brent was down 98 cents, or 2.1 percent, at $45.22 a barrel by 1:21 p.m. EDT (1721 GMT). It hit a May 11 low of $45.18 earlier.
US West Texas Intermediate (WTI) crude slid 92 cents, or 2 percent, to $43.82.
Both benchmarks were on track to a weekly loss of about 5 percent.
The dollar's rally to a more than four-month high also hurt demand for greenback-denominated oil among holders of the euro and other currencies.
Iraq's oil exports were expected to rise in July, according to loading data and an industry source. If confirmed, it would put OPEC's No. 2 producer back on track of supply growth after a two-month lag.
"These large and increasing stocks will not only up the likelihood of additional commercial short hedges, but will also encourage the commercials to defer long hedges," said Jim Ritterbusch of Chicago-based oil markets consultancy Ritterbusch & Associates.
Earlier this week, the US government reported that domestic crude inventories were at 519.5 million barrels last week, historically high for this time of year, even after a ninth straight week of drawdowns.
On Thursday, traders said market intelligence firm Genscape reported a build of 725,176 barrels in the latest week at the Cushing, Oklahoma delivery point for US crude futures.
Falling oil prices have encouraged traders to send US supplies to Europe, counterbalancing 700,000 barrels per day in lost Nigerian supply.
US, European and Asian oil product stocks rose 2.35 million barrels last week for a second week of growth.
"The narrative of a balanced oil market (in the second half of 2016) has so far been an illusion," UBS oil analyst Giovanni Staunovo said.
Meanwhile, US drillers this week added oil rigs for a fourth consecutive week, according to a closely followed report on Friday, with the recent return to the well pad expected to soften the decline in domestic crude production.
Drillers added 14 oil rigs in the week to July 22, bringing the total rig count up to 371, compared with 659 a year ago, energy services firm Baker Hughes Inc. said. That is the biggest weekly increase since December.
Arab News
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