Oil falls as dollar lifts on US inflation data

Oil prices fell on Friday as the dollar strengthened on firming US inflation data, and profit-taking weighing in after a two-day crude rally.

US benchmark West Texas Intermediate for delivery in July dropped $1 to finish at $59.72 a barrel on the New York Mercantile Exchange.

Brent North Sea crude for July, the global benchmark futures contract, closed at $65.37 a barrel in London, down $1.17 from Thursday's settlement.

The Labor Department reported US consumer prices rose for a third straight month in April. Minus food and energy, the "core" consumer price index (CPI) rose 0.3 percent, the largest increase since January 2013.

The euro fell to $1.104 in afternoon trade, from $1.1112 late Thursday. A stronger greenback raises the cost of dollar-priced oil.

"The dollar is up ... on the back of rather strong CPI numbers," weighing on oil prices, said Bob Yawger of Mizuho Securities.

Also supporting the dollar, Federal Reserve Chief Janet Yellen reiterated that the Fed plan to raise rates in 2015 remained on track, saying she expects the economy to improve after a stall in the first quarter.

Analysts said that traders also appeared to book profits ahead of the long holiday weekend; markets are closed Monday in the United States and in several European countries, including Britain and France.

The closely watched Baker Hughes US oil rig count fell by just one rig in the week,  suggesting the end could be nearing for production cutbacks by oil companies as oil prices stabilize.

The rig count "should be plumbing the depths of its descent", said Matt Smith of Schneider Electric. "In reality higher prices will only incentivize production and assist the glut in persisting."