US oil closes lower on profit-taking; rig count rises

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Crude prices slipped on Friday after the U.S oil rig count rose the first time since December, renewing worries of a supply glut after an output freeze plan helped boost the market to 2016 highs and multi-week gains.

U.S. energy firms this week added one oil rig after 12 weeks of cuts, according to data by industry firm Baker Hughes. The addition, coming after oil rigs had fallen by two-thirds over the past year to 2009 lows, showed crude drilling picking up again after a 50 percent price rally since February.

"The rig count and crude prices have a direct relationship for sure," said Pete Donovan, broker at Liquidity Energy in New York.

Brent crude was down 24 cents at $41.30 a barrel, having risen $1 earlier to a 2016 high of $42.54.

U.S. crude for April delivery settled at $39.44 a barrel, was down 76 cents, or 1.89 percent, after gaining $1 earlier to a year high of $41.20.

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Despite the retreat, oil recorded multi-week gains. Brent was up for a fourth straight week and U.S. crude for a fifth week in a row.

Global oversupply in oil pushed crude prices down from mid-2014 highs above $100 a barrel to 12-year lows earlier this year, bringing Brent to around $27 and U.S. crude to about $26.

Over the past two months, prices rallied to reach above $40 after the Organization of the Petroleum Exporting Countries (OPEC) floated the idea of a production freeze.

"The market is probably too long here and needs a correction," said Scott Shelton, energy futures broker with ICAP in Durham, North Carolina.

A motorist fills his car with gas at a gas station near an oil field pumping rig in Oklahoma City, Oklahoma.
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The combination of declining oil output, smaller crude stockpile builds and surging gasoline consumption in the United States also helped the price recovery.

U.S. crude inventories hit a fifth straight week of record highs last week, government data showed on Wednesday, but the build of 1.3 million barrels was less than half of forecasts. Gasoline demand, meanwhile, jumped 6.4 percent over the past four weeks from a year ago.