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US crude settles lower at $53.17 as focus shifts to rising US output, ends the week up 1.4%

Oil jack pumps are pictured in the Kern River oil field in Bakersfield, Calif.
Jonathan Alcorn | Reuters
Oil jack pumps are pictured in the Kern River oil field in Bakersfield, Calif.

Oil prices slipped on Friday, extending losses after data suggested drilling is ramping up in the United States, easing the focus on efforts by OPEC and other producers to support prices by cutting supplies.

U.S. West Texas Intermediate (WTI) crude futures settled down 61 cents, or 1.1 percent, to $53.17 a barrel, but ended the week 1.4 percent higher.

Brent crude futures, the international benchmark for oil prices, were down 75 cents, or 1.3 percent, at $55.49 per barrel at 2:35 p.m. ET (1935 GMT). They were on pace for a weekly loss.

The U.S. weekly oil and gas rig count from Baker Hughes showed that U.S. drillers added 15 oil rigs in the week, the 12th gain in 13 weeks. That brought the total count to 566, the most since November 2015.

"We're in a holding pattern at this point in time," said Mark Watkins, regional investment manager at U.S. Bank Private Client Group. "Supply is a big factor right now and you have the U.S. really filling that gap that OPEC has left open."

Prices had risen during Asian business hours, though activity was low due to the start of the Lunar New Year holiday in most countries of the region, including China and Singapore.

The Organization of the Petroleum Exporting Countries (OPEC) and other producers, including Russia, agreed to cut production by almost 1.8 million barrels per day (bpd) for the first half of 2017 to fight a two-year supply overhang.

But U.S. oil production has been rising, with the International Energy Agency forecasting total U.S. production growth of 320,000 bpd in 2017 to an average of 12.8 million bpd.

John Kilduff, founding partner at energy hedge fund Again Capital, attributed a sharp drop in oil prices around 9 a.m. ET to weak economic data released shortly before the decline, which could spell further trouble for fuel demand.

"The durable goods and GDP hurt oil in particular. We're seeing gasoline demand down a lot," he said.

There were fundamental factors that impacted prices this week, such as gains in Iran's monthly oil exports in February and resilient production in Libya. A glitch in North Sea Buzzard crude production provided support.

But market participants warned of more volatility ahead as speculators were reacting to even small developments in the physical markets.

"Given that speculative net long positions in Brent and WTI are already at a record-high level, the correction potential is therefore growing all the time," Commerzbank analyst Carsten Fritsch said in a note.

— CNBC's Tom DiChristopher contributed to this report.