Oil fell on Friday, dragged down by economic concerns, the stronger dollar and a dip in the stock market. US crude for April, which expires on Friday, settled down 55 cents at $51.06 a barrel. May crude edged up 3 cents to settle at $52.07 a barrel. London Brent crude rose 55 cents to settle at $51.22 a barrel.
"The weaker euro and the stock market seem to have invited profit-taking in the oil markets. A number of traders are still sceptical about the ability of this oil market to advance in the face of a recession," said Peter Beutel, president, Cameron Hanover, New Canaan, Connecticut. US stocks fell as long-standing worries about the health of the banking system resurfaced and concerns were raised by a brokerage over America Express yearly performance.
The US dollar rebounded and the euro reversed earlier gains, lending further support to crude. The stronger dollar tends to weigh on commodities denominated in the greenback. Oil had surged 7 percent on Thursday after the Fed announced its plan to buy long-term government debt and the dollar tumbled in value. Crude has fallen $100 dollars from highs above $147 a barrel last July, as the global economic crash has shrunk demand for the fuel.
Bank of America Securities-Merrill Lynch raised its 2009 oil price forecast to $52 a barrel from $50 on signs supplies could tighten in the second half of this year, but cut its 2010 outlook to $62 a barrel from $70, citing weak demand. The International Monetary Fund forecast on Thursday the world economy would contract in 2009 for the first time since World War Two by between 0.5 percent and 1.0 percent.
Crude stockpiles have swelled in the United States due to slumping consumption, and some analysts cautioned it may be difficult for oil prices to sustain the recent rally. Still, some analysts say deep output cuts by producer group Opec agreed to last year are starting to tighten markets. Oil tanker shipping company Frontline said there are around 40 very large crude carriers storing oil offshore, each with a capacity of around 2 million barrels - a combined potential of one full days worth of global oil supplies.
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