New York: Crude fell the most in 10 weeks as the number of rigs drilling for oil in the US climbed and the US dollar strengthened against its peers.

Futures tumbled 3 per cent in New York. Rigs targeting crude in the US rose by 3 to 328 this week, capping the first two-week gain since August, Baker Hughes Inc. said Friday. The dollar rose, making commodities denominated in the currency less attractive as an investment. Prices climbed earlier this week as US crude stockpiles declined and disruptions cut Canadian and Nigerian supply.

Tim Evans, an energy analyst at Citi Futures Perspective in New York, said even though the “market is so intensely focused on the rig count now,” the two-week gain won’t have much effect on actual supply in the near-term.

“The uptick can at most be considered an inflection point where the rig-count decline stopped. It will take at least six months before it will be reflected in supply,” he said.

Oil has surged about 90 per cent from a 12-year low in February as the global glut is trimmed by disruptions and a slide in US output, which is under pressure from the Organisation of Petroleum Exporting Countries’ policy of pumping without limits.

West Texas Intermediate for July delivery slipped $1.49 to settle at $49.07 a barrel on the New York Mercantile Exchange, the biggest decline since April 4. Futures rose 0.9 per cent this week. Total volume traded was 6.8 per cent below the 100-day average.

Commodity Decline

Brent for August settlement dropped $1.41, or 2.7 per cent, to $50.54 a barrel on the London-based ICE Futures Europe exchange. The North Sea crude, used as a global benchmark, climbed 1.8 per cent this week. Brent closed at an 82-cent premium to WTI for August delivery.

The Bloomberg Dollar Spot Index, which tracks the currency against 10 major peers, rose as much as 0.8 per cent after rallying 0.4 per cent on Thursday. The Bloomberg Commodity Index looked set for a second day of losses Friday.

Global stocks headed for the biggest drop in two months and bond yields slid to record lows as investors braced for next week’s Federal Reserve meeting and Britain’s referendum on European Union membership later this month.

“Ninety per cent of the world’s oil is dollar-denominated,” so any change in dollar value will “feed through pretty directly,” Paul Sankey, an energy analyst at Wolfe Research LLC, said on Bloomberg Radio. “We are expecting Canadian production to come back soon.”

Alberta Wildfires

Fires in Canada’s oil-sands region are expected to disrupt supplies by an average of 400,000 barrels a day this month, after peaking at more than 1.1 million barrels a day of lost production in May, according to the US Energy Information Administration. Cenovus Energy Inc. is in the process of restarting production at the Pelican Lake oilfield after shutting operations on Wednesday.

Oil producers in Nigeria are facing a renewed wave of violence in the delta region that accounts for most of the country’s crude. The country’s output dropped to the lowest in almost three decades as armed groups intensified attacks to rupture pipelines in recent months.

US crude stockpiles fell 3.23 million barrels to 532.5 million last week, the lowest since April 1, data from the EIA showed. Gasoline supplies climbed by 1 million to 239.6 million barrels, while inventories of distillates, a category including diesel and heating oil, rose by 1.75 million to 151.4 million barrels.