US oil settles down 81 cents, or 1.33%, at $59.96 a barrel

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Oil settled more than 1 percent lower on Friday after oilfield services firm Baker Hughes reported its U.S. rig count declined for a 27th straight week.

U.S. light crude closed down 81 cents, or 1.33 percent, at $59.96 a barrel. Brent crude was trading $1 lower at $65 a barrel.

The number of rigs exploring for oil in the United States fell by 7, the biggest drop since May, to a total of 635. This time last year, the rig count stood at 1,542.

For the week, both Brent and U.S. crude were up 2 percent.

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Oil fell for the second straight day on Friday, with investors taking more profits from the week's gains after Saudi Arabia signaled it was ready to raise production to record highs, reigniting worries about oversupply.

Gasoline also fell, retreating from seven-month highs. Even so, the fuel had one of the strongest fundamentals on the U.S. oil complex, traders said, due to runaway demand from relatively low pump prices and seasonally busy road travel.

Greece's debt crisis dominated sentiment on global markets, helping the dollar stay steady against the euro and keeping a lid on crude's rebound. A stronger greenback makes oil, sold in dollars, less affordable to euro holders.

After Thursday's 1 percent drop, crude extended its downdraft by another 1 percent as Saudi Arabia said it was in talks with Indian buyers to supply additional oil, meaning it could top the record 10.3 million barrels per day produced in May.

Saudi Arabia and others in the Organization of the Petroleum Exporting Countries already produce 1 million to 2 million bpd above their collective target of 30 million bpd. The kingdom's latest stance raises worries about oversupply just as signs emerge that some of the glut in U.S. shale might be receding.

"I think oil is stuck in a range until we get clearer info on inventory trends," said ICAP crude oil broker Scott Shelton.

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The International Energy Agency said on Thursday it expected world oil demand to rise more than expected this year on the back of economic recovery and a relatively cold winter in the northern hemisphere.

But JBC Energy analysts said the IEA focused on the first half of 2015, meaning demand would tail off by the year-end.

"We believe ... growth will likely slow as the price-driven demand upswing of recent quarters fades" over the second half, the analysts wrote.