U.S. oil closed lower on Friday but managed to end the week slightly higher, marking its ninth straight weekly gain.
June West Texas Intermediate futures closed down 19 cents, at $59.69 a barrel. July Brent crude was 10 cents higher at $67 a barrel, also dropping more than $1 earlier in the session. Front-month Brent is on track for a weekly gain after a 1.6 percent decline last week interrupted its month-long rally.
Oil prices held steady after oilfield services firm Baker Hughes reported drillers took the fewest rigs out of U.S. oilfields since December, suggesting the collapse in drilling may be coming to an end as prices recover after falling 60 percent from June to March.
The number of rigs drilling for oil fell by eight this week to 660, after declining by 11 and 24 rigs in the prior two weeks, respectively. This time last year, U.S. drillers were operating 1,531 rigs.
With the oil rig decline this week, the number of active rigs has fallen for a record 23 weeks in a row to the fewest since August 2010, according to Baker Hughes data going back to 1987.
Oil fell earlier on Friday as renewed worries of a supply glut weighed on a market that traders fear is overpriced after a recent rally.
Gasoline and heating oil joined the slide, pulling the petroleum complex lower, as analysts and traders said the higher demand for such oil products and drop in crude stockpiles lately weren’t enough to justify total inventory numbers.
Futures of North Sea Brent oil are up nearly 20 percent since the end of March, while U.S. crude has risen almost 30 percent, a rebound that appears to have overshot and could be about to correct.
“A mood change is in the air,” Eugen Weinberg, global head of oil and commodities research at Commerzbank in Frankfurt, told the Reuters Global Oil Forum. “The oil price rally looks like it may be slowly running of steam.”
The drop came even as investors kept a close eye on rising tensions in the Middle East after Iranian vessels fired shots at a Singapore-flagged tanker in the Gulf on Thursday.
The International Energy Agency says OPEC is pumping at least 2 million barrels per day more than required.
The U.S. Energy Information Administration says world stocks are rising at 1.95 million bpd this quarter and will build until at least through 2016.
U.S. demand for fuel is likely to pick up in the second half while global production runs well ahead of consumption. Without a major, unexpected disruption, the glut will persist, analysts say.
“Sure, U.S. gasoline demand has been strong, but we still have almost 485 million barrels in crude inventories. That’s a ton in supply,” said Chris Jarvis at Caprock Risk Management in Frederick, Maryland.
—CNBC’s Tom DiChristopher contributed to this report.