The Brent crude benchmark for November delivery was down $1.97 at $48.02 a barrel as of 2:38 p.m. ET after rising above $50 for the first time in two weeks on Thursday.
NYMEX crude for October delivery was down $1.73 at $45.89, with both contracts pressured by a stronger dollar index amid concerns over the health of the EU economy.
The U.S. oil drillers added seven rigs for the week, marking the 10th week of increase in 11, according to Baker Hughes.
The International Energy Agency has said it expects oil demand to finally exceed supply in the third quarter of 2016, meaning record global crude stockpiles should start falling.
But analysts from Morgan Stanley said in a note on Friday there were risks the market might not rebalance until later.
"Once again, we see an increasing probability for several unexpected bearish developments to come together, which could push off re-balancing (seasonally-adjusted demand exceeding supply) to late 2017, or even 2018," Morgan Stanley said.