June 27 (Reuters) - Grades were mixed on Friday, dealers said, as the spread between U.S. crude futures and the global benchmark Brent narrowed to its smallest discount in more than three years during the Friday session, while domestic supplies are set to slip.

U.S. crude futures' discount to Brent narrowed to as little as $2.20 a barrel on Friday, the narrowest since May 2022. A narrower spread makes U.S. grades less attractive to foreign buyers.

Minus $4 per barrel is typically considered the level that encourages U.S. exports, as traders see an open arbitrage route.

Meanwhile, U.S. energy firms cut the number of oil and natural gas rigs operating for a fourth month in a row to the lowest since October 2021, energy services firm Baker Hughes BKR.O said in its closely followed report on Friday.

Baker Hughes said oil rigs fell by six to 432 this week, also their lowest since October 2021, while gas rigs decreased by two to 109.

Oil futures edged up slightly on Friday, recovering from a midday drop into negative territory following a report that OPEC+ was planning to hike production in August, but tumbled about 12% in the week in their biggest drop since March 2023. O/R

* Light Louisiana Sweet WTC-LLS for August delivery was steady at a midpoint of a $2.30 premium and was seen bid and offered between a $2.20 and $2.40 a barrel premium to U.S. crude futures CLc1

* Mars Sour WTC-MRS fell 45 cents to a midpoint of a $1.40 premium and was seen bid and offered between a $1.30 and $1.50 a barrel premium to U.S. crude futures CLc1

* WTI Midland WTC-WTM fell 5 cents to a midpoint of a 15-cent premium and was seen bid and offered between a 5-cent and 25-cent a barrel premium to U.S. crude futures CLc1

* West Texas Sour WTC-WTS rose 20 cents to a midpoint of a 45-cent discount and was seen bid and offered between a 55-cent and 35-cent a barrel discount to U.S. crude futures CLc1

* WTI at East Houston WTC-MEH, also known as MEH, traded between a 20-cent and 40-cent a barrel premium to U.S. crude futures CLc1

* ICE Brent August futures LCOc1 rose 4 cents to settle at $67.77 a barrel

* WTI August crude CLc1 futures rose 28 cents to settle at $65.52 a barrel

* The Brent/WTI spread WTCLc1-LCOc1 narrowed 15 cents to last trade at minus $2.34, after hitting a high of minus $2.20 and a low of minus $2.54

(Reporting by Georgina McCartney in Houston; Editing by Andrea Ricci)

((Georgina.McCartney@tr.com))