U.S. oil tumbled 4 percent on Friday after the Saudi deputy crown prince reportedly said the kingdom will not freeze production unless Iran and other major producers do so.
Futures slightly pared losses after oilfield services firm Baker Hughes reported its weekly count of oil rigs operating in the United States fell by 10 to a total of 362. At this time last year, drillers had 802 rigs in U.S. oil fields.
The dollar's first rebound in a week after stronger-than-expected U.S. jobs data added pressure on oil, making crude prices denominated in the greenback less attractive for holders of the euro and other currencies.
U.S. employment increased solidly in March and wages rebounded, signs of economic strength that could allow a cautious Federal Reserve to raise interest rates gradually.
"I think (the payrolls report) is probably what's sent us over the edge in oil," CMC markets analyst Jasper Lawler said.
Brent crude for June delivery fell $1.63, or 4 percent, to $38.70 a barrel. Brent rose 6 percent in the first quarter of this year, its first such increase since a 15 percent rally in the second quarter of 2015.
U.S. crude settled at $36.79 a barrel, down $1.55, or 4 percent after settling up 2 cents on Thursday. Prices rose almost 4 percent over January-March, also the first quarterly gain since surging nearly 25 percent in the second quarter of last year.
Oil had rallied for the past six weeks after major producers within and outside the Organization of the Petroleum Exporting Countries floated the idea of freezing output at January's highs.
But Saudi Deputy Crown Prince Mohammed bin Salman said the OPEC kingpin will not join the program without the participation of Iran and other major producers, Bloomberg reported.
The Saudi deputy crown prince also told Bloomberg Saudi Arabia is looking to create the world's largest public company as it plans to offload a stake of less than 5 percent of the Saudi Arabian Oil Company. The move would provide the kingdom with a cash infusion that would theoretically allow Riyadh to extend the high-production policy it spearheaded as OPEC's top exporter.
Prices have recently pulled back on low trading volumes and concerns about oversupply ahead of an oil producers' meeting in Doha to agree a possible output freeze on April 17.
Iran has steadfastly maintained that it will not contribute to any output freeze until its crude exports return to pre-sanction levels.
"The primary reason that oil prices are being dealt a solid dose of the WBWs (whoop-bang-wallops) today lies with Saudi Prince Mohammed bin Salman," Matt Smith, director of commodities research at Clipperdata, wrote in a commentary. "The King's son threw cold water on hopes of a production freeze."
A Reuters monthly survey showed this week that OPEC output rose in March on higher supply from Iran after the lifting of sanctions and near-record exports from southern Iraq.
Oil prices fell despite China's official Purchasing Managers' Index (PMI) showing an unexpected expansion in March, the first in nine months.
Earlier in the session, a drop in U.S. crude output put a floor under losses. Production fell for a fourth straight month in January to the lowest since October 2014.
— CNBC's Tom DiChristopher and CNBC.com Europe staff contributed to this story.