US oil tumbles 4.7% to settle at $44.68 a barrel

Commodities next week: Wild swings continue
Commodities next week: Wild swings continue

U.S. oil prices fell about 5 percent on Friday after U.S. energy firms cut oil rigs for a third week in a row this week, data showed on Friday, a sign the latest crude price weakness was causing drillers to put on hold plans announced several months ago to return to the well pad.

The drop comes amid increased concerns about the outlook for energy demand. The U.S. central bank warned of the health of the global economy and bearish signs persisted that the world's biggest crude producers would keep pumping at high levels.

Drillers removed eight rigs in the week ended Sept. 18, bringing the total rig count down to 644, after cutting 23 rigs over the prior two weeks, oil services company Baker Hughes Inc said in its closely followed report.

Those reductions cut into the 47 oil rigs energy firms added in July and August after some drillers followed through on plans to add rigs announced in May and June when U.S. crude futures averaged $60 a barrel.

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U.S. West Texas Intermediate (WTI) crude futures settled down 4.7 percent at $44.68 a barrel. Brent crude was down $1.80, or about 4 percent, at $47 a barrel.

Oil closes down nearly 5%
Oil closes down nearly 5%

U.S. oil prices, however, have averaged $46 a barrel so far this week, up a bit from the $45 average last week.

In response to falling prices, U.S. oil production has declined over the past several weeks with output down to about 9.1 million barrels per day last week from an average 9.6 million bpd from late May to mid July, the highest since the early 1970s, according to government data.

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"The current rig count is pointing to U.S. production declining sequentially between the second quarter of 2015 and the fourth quarter by 250 thousand barrels a day," analysts at Goldman Sachs said in a note.

Those output reductions occurred months after U.S. energy firms slashed spending, cut thousands of jobs and idled around 60 percent of the record 1,609 oil rigs that were active in October 2014 as prices collapsed from around $107 a barrel in June 2014 to under $44 in January on lackluster global demand and lingering oversupply concerns.