US oil settles down 31 cents, or 0.6%, at $48.14 a barrel

An oil pump jack in Gonzales, Texas.
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U.S. crude closed lower on Friday after Baker Hughes data showed an increase in U.S. oil rigs.

Baker Hughes data showed U.S. oil rigs rose by 21 week-over-week to 659. Nevertheless, the count remains down by 903 rigs year-over-year. The gain this week was also only the third increase over the past 33 weeks, bringing the total rig count up to 659, the highest since late May, Baker Hughes said in its report.

West Texas Intermediate oil futures settled down 31 cents, or 0.6 percent, at $48.14 a barrel—the lowest since March 31. It hit a session low of $47.72 a barrel after the release. Brent was down 0.6 percent, at $54.60 a barrel.

Brent and U.S. crude have posted double-digit losses in July. With U.S. crude off more than 18 percent, it could challenge the 19.4 percent loss in December.

U.S. crude losses follow Thursday's fall into bear market territory, with its $48.45 a barrel settlement off 21 percent from the June 10 close at $61.43. A 20 percent downturn is considered by many traders to constitute a bear market.

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China's factory sector contracted by the most in 15 months in July, a preliminary private survey showed on Friday, a worse-than-expected result that follows a stock market slide that began in June.

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The world's top oil companies are set to report second-quarter earnings showing another drop in profits that could force more spending cuts, according to analysts.

"We feel that U.S. production could begin to show significant slippage while oil rig counts post new lows," Jim Ritterbusch, president at Ritterbusch & Associates, said in a note on Friday.

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The dollar's strength also applied pressure, as a stronger U.S. dollar makes greenback-denominated oil more expensive for consumers using other currencies.

December's slide was the biggest monthly slump since the financial crisis in 2008.

Signs of economic slowdown in China have pressured oil and metals, with industrial feedstock copper slumping to the lowest levels in six years.

Demand for gasoline has been strong, keeping refineries churning at high utilization rates, but front-month August U.S. RBOB gasoline futures made a decisive move below its 200-day moving average of $1.8514 a gallon on Friday.

"This looks like profit-taking as the end of the U.S. driving season gets closer," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.

Set for a 5 percent weekly drop, it would be gasoline's biggest since mid-March and a sixth consecutive weekly slide, most since the seven weeks ending Jan. 9.