Oil prices fell on Friday, with U.S. crude set to post the largest monthly drop since the 2008 financial crisis, after signs that top producers in the Middle East were continuing to pump at record levels despite a growing global gut.
Uncertainty ahead of key U.S. oil production and rig count data due later in the day also weighed on oil despite a weaker dollar on Friday that normally would be supportive to commodities.
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That aside, heavy hedging activity in gasoline and diesel futures ahead of front-month contract expiry dominated play on the petroleum complex, diverting attention from crude futures.
Futures of global benchmark Brent and U.S. crude oil were down more than 1 percent each on the day. Brent was down almost 4 percent on the week, declining for a fifth week in a row.
Through July, U.S. crude was down 20 percent, its largest monthly decline since October 2008, when oil had an epic collapse at the outbreak of the financial crisis.
July's losses came on the back of a stock market tumble in top energy consumer China and a growing oversupply in oil.
A Reuters survey on Friday showed that Saudi Arabia and other big oil producers in the Middle East, members of the Organization of the Petroleum Exporting Countries, were not wavering in their quest for market share over prices.
According to the survey, OPEC pumped more than 32 million barrels per day this month, up 140,000 bpd from June, reaching the highest monthly level in recent history.
"The news on OPEC oil output hitting a new high is bearish for crude," said David Thompson of Washington-based oil brokers Powerhouse.
Brent was down 80 cents at $52.51 a barrel by 12:02 p.m. EDT (1602 GMT).
U.S. crude was down 90 cents at $48.62.
Commerzbank's head of commodities research in Frankfurt, Eugen Weinberg, said OPEC has to eventually cut production to avoid lower prices, expressing hope it will "agree on a stricter quota discipline at its December meeting."
China's state planner said on Friday a slowing economy must not be allowed to morph into social risks as the volatile Chinese stock market fell again.
Market participants will be looking out for U.S. rig count data from industry firm Baker Hughes at 1700 GMT and statistics on monthly crude production at 1800 GMT. (Additinal reporting by Christopher Johnson in London and Keith Wallis in Singapore; Editing by Jason Neely and Chris Reese)