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.
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"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.