|Copyright, Joey Mechelle Stenner|
NYMEX September crude settled 79 cents lower at $43.87/barrel. ICE September Brent settled down 91 cents at $48.61/b.
In refined product activity, NYMEX September ULSD was almost unchanged, down 63 points at $1.5436/gal. NYMEX September RBOB settled 2.48 cents lower at $1.6230/gal.
"I don't see any support until WTI reaches its previous low from March," said Robert Yawger, director of energy futures at Mizuho Securities.
Front-month NYMEX crude fell to $42.03/b March 18, a low not seen since March 2009.
The next line in the sand below that would be $40/b, a level that has drawn significant attention from options traders, Yawger said.
CME Group data Friday showed open interest for NYMEX September crude put options with a $40/b strike price at 19,471 lots.
Among September 2015 puts, the $40/b strike price had the most open interest. CME Group open interest data is delayed one day.
The September 2015 put with $40/b strike price has seen open interest rise in response to falling crude prices.
CME Group data showed open interest at 14,879 lots June 26. Since then, front-month NYMEX crude has lost ground on a week-on-week basis, totaling six consecutive weeks, including Friday's settle.
Puts provide the holder with the right to sell crude futures at a specified price.
U.S. OIL RIG COUNT
The number of active U.S. oil rigs rose by six to 670 in the week that ended Friday, Baker Hughes said. In five of the last six weeks the rig count has increased, having previously fallen every week since December.
The Permian Basin added five rigs to bring its total to 252. Other basins seeing an increase included Eagle Ford, up one rig to 79, and Williston, up one rig to 72.
Since drilling activity began waning in October the U.S. oil rig count dropped as low as 628, a total posted in the week ended June 26.
Yet U.S. crude production has been resilient, averaging 9.465 million b/d the week ended July 31, versus 8.951 million b/d in early October, according to the Energy Information Administration's latest estimates.
A decrease in production from non-OPEC countries, like the U.S., is needed for oil prices to recover in 2016, analysts at BNP Paribas said in a note Friday.
That is because demand is unlikely to strengthen, while OPEC supply is expected to reach 32.4 million b/d by December 2016, up from 31.8 million b/d, they said.
OPEC's "cumulative impact will certainly attenuate the path of an eventual price recovery in 2016, notwithstanding strategic stockpiling removing some oil off the market."
U.S. JOBS REPORT
Crude futures were under selling pressure early Friday as the US dollar strengthened after a much-anticipated July jobs report was seen as increasing the odds the Federal Reserve will hike interest rates in September.
Nonfarm payrolls increased 215,000 in July and wages picked up 0.2%, the US Department of Labor said Friday. The unemployment rate was unchanged at 5.3%.
"Overall, the payrolls and employment reports signal a relatively robust labor market, which could mean a rate hike is more likely in September," Confluence Investment Management said in a note.
The U.S. dollar index reached 98.3, up 0.5%, in the wake of the data release, putting downward pressure on crude prices.