Oil prices fall on economic concerns

HOUSTON — U.S. oil opened into a selloff and extended losses Friday, as traders shrugged off a falling U.S. rig count and focused on the Federal Reserve’s concerns about weak global economic growth.

On Thursday, the Federal Reserve said it would hold interest rates at near zero until more definitive signs of a recovery took hold, sparking an energy-market selloff that spilled into Friday. Traders saw the move as a sign of a weaker demand from the world’s economies.

Also on Friday, oil service company Baker Hughes reported that producers idled eight oil rigs during the week. The falling rig count has curtailed U.S. production and helped to support oil prices, but traders kept selling after the count fell.

U.S. crude oil for October delivery lost about $1.72 per barrel or 3.7 percent to $45.18 per barrel in early trading Friday. The October contract expires Tuesday.

“We’re still suffering from the Fed hangover and concerns about global economic growth,” said Phil Flynn, an analyst with the Price Futures group.

The total oil rig count has now stands at 644 and has fallen in each of the past three weeks. Rigs chasing natural gas number 198 and rose two this week, the company said. The oil rig count peaked in October at 1,609 and has now fallen by about 60 percent, helping to stem the tide of U.S. oil flooding onto the market.

However, the positive effect any U.S. cuts have had have been offset by continued strong global oil production and tepid international economic growth.

In addition, the connection between the rig count and daily gains or losses on the oil markets has weakened recently, as the direct link between the number of rigs and the production of oil has been muddied.

“It’s probably time to retire the intense short-term focus on the rig count,” said Tim Evans, a commodities trader at Citi Futures. “It’s perhaps a longer-term indicator of whether we should be looking for production growth or production decline, but it’s not really a great short-term trading indicator.”