US oil settles up 27 cents, or 0.6%, at $42.50 a barrel

US oil rig counts up by 2

U.S. crude oil closed higher on Friday after oilfield services firm Baker Hughes reported its oil rig count rose for a fourth straight week.

The number of rigs drilling for oil in the United States rose by 2 from the previous week, bringing the total to 672. Drillers had 1,589 rigs online at this time last year.

U.S. crude was closed up 27 cents, or 0.6 percent, at $42.50 a barrel, after hitting an intraday low of $41.35, its lowest since March 4, 2009.

The lowest U.S. crude price in the aftermath of the financial crisis occurred on January, 2009, when WTI dipped to $33.20 per barrel, falling 77 percent fall from it peak near $147 in July, 2008.

Brent crude traded at $48.90, down 30 cents and some way off its 2015-low of $45.19 reached in January. The front-month September Brent contract expires on Friday.

U.S. benchmark crude steadied earlier on Friday after falling to its lowest in almost 6½ years as huge stockpiles and refinery shutdowns heightened concerns about global oversupply.

Oil had already tumbled more than 3 percent on Thursday, driven by a report that stocks at Cushing, Oklahoma, the delivery point for U.S. crude futures, rose more than 1.3 million barrels in the week to Aug. 11.

Read MoreOil stocks have done something extraordinary: Trader

U.S. crude is much weaker than the North Sea benchmark, partly due to a spate of refinery outages that has sapped U.S. demand. The largest of those refineries—BP PLC's 413,500 barrels per day (bpd) facility in Whiting, Indiana, also the biggest in the U.S. Midwest—has been forced to shut two-thirds of its capacity for repairs to a leak that could last a month or more.

Oil's impact on solar energy

The Obama administration will allow limited sales of U.S. crude to Mexico for the first time, a senior administration official told Reuters, marking another milestone in loosening a contentious ban on exporting domestic oil.

The Commerce Department is "acting favorably on a number of applications" to export U.S. crude in exchange for imported Mexican oil, the official said. Such oil swaps are one of several possible exemptions allowed in the four-decade-old law that otherwise bans most overseas shipments.

Read More Here's what could take oil down to $30

Robin Bieber, director and technical analyst at London brokerage PVM Oil Associates, said the U.S. crude oil contract, also know as West Texas Intermediate or WTI, had become somewhat dislocated from Brent.

"The contracts are not all on the same technical page and this causes a lack of clarity," Bieber said. "WTI could plunge but the rest hold steady."

Commerzbank analyst Carsten Fritsch said he didn't expect an accelerated drop in prices, but rather "a slow grind lower" as long as the Whiting refinery was out of service.

Petromatrix oil analyst Olivier Jakob said WTI could fall further, but Brent was in a consolidation phase: "WTI is still facing some local issues and it could weaken more. Otherwise Brent will start to stabilize."

On Friday, Citi Group revised down its base case crude oil price outlook to $54 per barrel for Brent in 2015 and $53 in 2016. It cut its U.S. crude outlook to $48 for 2015 and 2016.

Read MoreThis Gulf state is planning a sales tax amid oil slump

Goldman Sachs said a weaker Chinese yuan was putting downward pressure on all commodity markets, signaling a change in global macroeconomic conditions.

"We believe the net commodity market effects are bearish," it said in a note to clients.

—CNBC's Peter Schacknow contributed to this report.