Oil falls about 21% in July, worst since October 2008

Oil will be mired here for 2015: Analyst
Oil will be mired here for 2015: Analyst   

Oil saw its worst monthly drop since the 2008 financial crisis after signs that top producers in the Middle East were continuing to pump at record levels despite a growing global gut.

A higher U.S. oil rig count for a second week in a row added to the market's downside. Uncertainty ahead of key U.S. oil production and rig count data due later in the day also weighed on prices, despite a weaker dollar, which would normally support commodities.

U.S. crude closed down $1.40, or 2.89 percent, at $47.12 a barrel. The contract fell nearly 21 percent for the month of July, marking its largest monthly decline since October 2008, when oil had an epic collapse at the outbreak of the financial crisis. Brent fell 18 percent on the month.

Meanwhile, Brent was down $1.10 at $52.21 a barrel.

Diverting some attention from crude, heavy hedging activity in gasoline and diesel futures ahead of front-month contract expiration dominated play on the petroleum complex.

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Oil at mid-to-low $30s by Christmas: Kilduff
Oil at mid-to-low $30s by Christmas: Kilduff   

July's oil price drop was spurred by a stock market tumble in top energy consumer China and a growing global oversupply.

A Reuters survey on Friday showed that Saudi Arabia and other big oil producers in the Middle East, members of the Organization of the Petroleum Exporting Countries, were not wavering in their quest for market share over price.

According to the survey, OPEC pumped more than 32 million barrels per day this month, up 140,000 bpd from June.

"The news on OPEC oil output hitting a new high is bearish for crude," said David Thompson of Washington-based oil brokers Powerhouse.

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Also on Friday, industry firm Baker Hughes reported that U.S. energy firms added five oil rigs this week after putting 21 rigs into service last week, the most in over a year, despite the dive in U.S. crude prices from recent highs in June.

Commerzbank's head of commodities research in Frankfurt, Eugen Weinberg, said OPEC has to cut production to avoid lower prices, expressing hope on "a stricter quota discipline at its December meeting".

The market was awaiting U.S. government data on monthly crude production at 1800 GMT.