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Oil tumbles toward fourth straight monthly decline

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Oil prices dropped on Friday and were headed toward their fourth consecutive monthly fall as another round of monetary stimulus from Japan pumped up the U.S. dollar and pounded a crude market already suffering from robust supply.

Further pressure came from monthly surveys showing the Organization of the Petroleum Exporting Countries made almost no effort to curb production this month even as oil prices extended a months-long rout to four-year lows.

OPEC's output in October dipped by just 120,000 barrels per day, according to a Reuters survey published Friday. The downtick was led by Angola and Nigeria, with overall OPEC production still hovering 720,000 barrels per day above its 30 million barrels a day target.

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U.S. and Brent crude fell by about a dollar to put them both on pace for the steepest monthly decline since May 2012, and the longest monthly losing streak since 2008.

Brent for December was down 92 cents at $85.32 a barrel in late morning trade, after holding below $84 throughout much of the morning. The oil benchmark has fallen more than 10 percent so far in October, its biggest monthly drop since May 2012.

U.S. crude was down 79 cents at $70.33 per barrel, after dipping as low as $79.55 in mid-morning trade. It has lost 12 percent this month.

OPEC Secretary General Abdullah al-Badri said on Wednesday the cartel's output was unlikely to change in 2015 and that he was not concerned about falling prices, echoing the views from several of the group's core Gulf members.

There will be "tough discussions" at OPEC's next meeting in late November but the cartel is unlikely to alter its official quota of 30 million barrels a day, Hans van Cleef, senior energy economist at ABN AMRO in Amsterdam, told the Reuters Global Oil Forum.

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"OPEC will be happy to see prices languish in a lower range in order to regain market share against U.S. producers, whose costs are higher," said Tony Machacek, a broker at Jefferies in London.

The Bank of Japan surprised financial markets on Friday by expanding its stimulus program, boosting Japanese equities but raising concerns about the economic health of the oil importer.

"It's a big shot of stimulus, you see Japan basically doubling down on quantitative easing at a time when the U.S. is getting out of the Q.E. business," said Phil Flynn of the Price Futures Group. "What better time to have an impact in the market, to have a big shock value in the system?"

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The decision also put pressure on the yen, contributing to the strength of the dollar, which rose to a near seven-year peak of 112.22 yen.

The dollar rose to its highest level since June 2010 on Thursday after data showed the U.S. economy grew 3.5 percent in the third quarter, topping estimates for a 3 percent rise.

CNBC contributed to this report.