Oil prices fell more than $2 a barrel on Friday, posting a weekly decline as investors grappled with fading Middle East risk premiums along with uncertainty about a potential peace deal in Ukraine.

Brent crude futures fell $2.05, or 2.68%, to settle at $74.43 a barrel, while U.S. West Texas Intermediate crude fell $2.08, or 2.87%, to settle at $70.40.

Brent crude futures fell 0.4% for the week, while U.S. crude futures posted a weekly loss of 0.5%.

"There's a risk-off sentiment here," said John Kilduff, a partner at Again Capital in New York, who also cited relative calm in the Middle East as a ceasefire in Gaza remains in effect.

Investors also continued to weigh a rise in U.S. crude stockpiles, reported on Thursday, as seasonal maintenance at refineries led to lower processing, the Energy Information Administration said. [EIA/S]

U.S. energy firms this week added oil and natural gas rigs for a fourth straight week to the highest level since June, energy services firm Baker Hughes (NASDAQ:BKR) said in a report on Friday.

The oil and gas rig count, an early indicator of future production, rose by four to 592 in the week to Feb. 21.

However, traders were also focused on oil supply disruptions, which limited some losses.

Russia said oil flows through the Caspian Pipeline Consortium, a key route for crude exports from Kazakhstan, were reduced by 30-40% on Tuesday after a Ukrainian drone attack on a pumping station.

However, oil flows from Kazakhstan's Tengiz oilfield via the CPC were not disrupted, Russia's Interfax news agency reported on Friday, citing Tengizchevroil.(Newsmaker23)

Source: Investing.com