US oil settles at $43.41 a barrel, down $1.25, or 2.80%

A pump jack operates at a well site leased by Devon Energy Production Co. near Guthrie, Oklahoma.
Nick Oxford | Reuters

Oil prices tumbled more than 2.5 percent on Friday after OPEC said October output reached another record, casting doubt on whether its plan to limit production is achievable or enough to ease persisting oversupply in the market.

The Organization of the Petroleum Exporting Countries said Friday that its output rose to 33.64 million barrels per day (bpd) last month, up 240,000 bpd from September.

International Brent crude futures traded at $44.74 per barrel at 2:09 p.m. ET, down $1.10, or 2.40 percent, after hitting its lowest since August.

U.S. West Texas Intermediate futures were down by $1.23, or 2.75 percent, to $43.43 per barrel.

U.S. crude oil rigs rose by 2 this week, and now total 452, according to Baker Hughes. Oil rigs in the U.S. have fallen by 122 since this time last year, Baker Hughes said.

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Crude futures have wiped out gains made since the end of September when OPEC said it would agree to cut oil production to shore up persistently low prices.

While investors have been skeptical that a deal to cut or freeze oil output levels will be reached at an OPEC meeting on Nov. 30, an increasing amount of data has underscored a global skew towards oversupply.

Following its latest data, the cartel would have to trim up to a million barrels per day of output to make good on its promise to reduce production to between 32.50 million bpd and 33.0 million bpd.

"The next couple of weeks, even if they get a deal done, there's so much oil coming to the market," said Tariq Zahir, trader at Tyche Capital Advisors in New York.

"Prices deserve to be here, maybe even a little lower."

Adding to bearish sentiment was U.S. rig count data by oil services company Baker Hugh, expected at 1 p.m. EST (1800 GMT), which have shown an increase in 20 weeks out of the last 23.

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The International Energy Agency (IEA) has said the supply overhang could run into a third year in 2017, should OPEC fail to act.

In its monthly oil market report on Thursday, the IEA said global supply rose by 800,000 bpd in October to 97.8 million bpd, led by record OPEC output and rising production from non-OPEC members such as Russia, Brazil, Canada and Kazakhstan.

Beyond oversupply, a surging dollar following the initial shock of Donald Trump's U.S. presidential election win also put pressure on prices, traders said.