West Texas Intermediate futures for August delivery dropped to $56.63 (-0.53%). Meanwhile Brent crude for August fell to $61.86 (-0.34%) a barrel.

Crude oil prices fell after sources reported that the number of rigs in the U.S. rose by 12 to 640, intensifying concerns of a prolonged supply glut around the globe. According to Reuters, Goldman Sachs analysts believe that U.S. oil production growth will reach 135,000 barrels per day year-on-year by the end of this year. Meanwhile supply from the Organization of the Petroleum Exporting Countries rose to a three-year high of 31.60-million barrels a day in June from 31.30-million barrels a day in May. At the same time Russia doesn't want to lose its position as well.

"U.S. shale producers have brought down the breakeven cost from $35 to $20 per barrel," ANZ bank said on Friday. Demand remains subdued. Considering market conditions economists say that prices may decline further.

Market participants are also waiting for an outcome of negotiations with Iran.