Crude oil futures lost more ground on Friday, with the U.S. market set for a second week of decline on pressure from record U.S. production and expectations of OPEC boosting output.
U.S. West Texas Intermediate crude lost 16 cents, or 0.2 percent, to $66.88 a barrel by 0423 GMT, after falling almost 2 percent on Thursday.
Global benchmark Brent crude, which was little changed in the previous session, was down 9 cents, or 0.1 percent, to $77.47 per barrel.
For the week, WTI is on track for a 1.5 percent fall, adding to last week's near 5 percent decline, while Brent is set to rise 1.3 percent, widening the spread between the two benchmarks.
U.S. crude production has been rising to record-high levels since late last year. In March it jumped 215,000 barrels per day (bpd) to 10.47 million bpd, a new monthly record, the Energy Information Administration (EIA) said on Thursday.
"U.S. production is growing, the line is growing straight up when you look at U.S. production," said Tony Nunan, oil risk manager at Mitsubishi Corp in Tokyo.
"The big thing is the increasing spread between Brent and WTI. Financially it makes sense for buyers to take WTI as it is so cheap."
On Thursday, the premium for Brent over WTI surpassed $11 a barrel, the largest since early 2015. It has doubled in less than a month, as a lack of pipeline capacity in the United States has trapped a lot of output inland.
"A drop in inventories in the U.S. was overshadowed by U.S. output which jumped to a record-high level," ANZ said in a note.
U.S. crude stockpiles fell 3.6 million barrels last week, the EIA said, exceeding expectations for a decline of 525,000 barrels.
Russia would be able to raise its oil output back to pre-cut levels within months if there is a decision to unwind the price-protection deal with OPEC and other producers, a Russian energy ministry official said.
Concerns about U.S. bottlenecks are contributing to the decline in U.S. futures as well. Prices for physical barrels of U.S. light sweet crude delivered at Midland are at their largest discount to the benchmark U.S. futures price in almost four years.
