US oil settles down 91 cents, or 2%, at $44.29 a barrel

Pump jacks in an oil field over the Monterey Shale formation near Lost Hills, Calif.
Getty Images

Oil closed down for a third straight day on Friday, logging their third weekly decline in four, as the dollar rallied on expectations of a rate hike before the year-end after strong U.S. jobs growth for October.

U.S. crude futures settled down 91 cents, or 2 percent, at $44.29 a barrel. Brent crude, the global benchmark for oil, was down about 50 cents at $47.50 a barrel.

Read MoreObama administration rejects Keystone XL pipeline

Prices remained steady after Baker Hughes reported the number of oil rigs operating in U.S. fields fell by 6 in the previous week to a total of 572, compared with 1,568 at the same time last year.

U.S. oil drillers have now cut rigs for 10 consecutive weeks, a sign that low crude prices were keeping energy firms away from new production.

Oil driven market: Cashin
Oil driven market: Cashin

Brent and U.S. crude futures headed for a weekly loss of about 4 percent as the dollar strength added to the bearish sentiment in oil since Wednesday's government data showing another weekly build in U.S. crude stockpiles.

Up 5 percent since early October, the dollar hit 6½-month highs against a basket of currencies after U.S. nonfarm payrolls rose by 271,000 last month, the largest growth in almost a year.

The spike in employment makes it more likely the Federal Reserve will hike interest rates in December, further bolstering the dollar and making commodities denominated in the greenback less affordable to holders of other currencies.

Read MoreOil companies are learning to do more with less

"The jobs number may be strength for the U.S. economy but it's being interpreted as weakness for oil," said Pete Donovan, broker at New York's Liquidity Energy.

"The thing to watch will be calendar spreads in crude. If they keep widening, I don't imagine we will get much upside retracement."

The discount between spot U.S. crude and its nearest forward month was at more than $1 a barrel, its widest since mid-May. The discount, also known as "contango," widens for oil slated for delivery in the future as traders store crude with the hope of selling it later for a better price.

—CNBC's Tom DiChristopher contributed to this report.