Crude oil plunged on Friday as traders bet a recent rally was overdone. The decline erased most of the losses from this week.

Light sweet crude ended at $52.38, down $1.96 for the session. Prices touched as low as $51.64 after challenging $55 in recent days.

On the economic front, the Commerce Department reported personal spending rose 0.2 percent in February following an upwardly revised 1.0 percent increase in January. The modest increase in spending came in line with the expectations of economists.

At the same time, data showed personal income edged down 0.2 in February after a downwardly revised 0.2 percent increase in the previous month. Economists had been expecting a slightly more modest 0.1 percent decrease.

Later in the morning, the final reading of the Reuters/University of Michigan's consumer sentiment index for March showed a reading of 57.3. Economists had expected the index to come in at 56.8.

Oil's hedge value declined as the dollar rose sharply versus the euro, climbing near 1.3250. The buck also gained on the pound.

Light sweet crude climbed on Thursday to $54.35, up $1.58 for the day. Oil hit as high as $54.66, its best mark since early January.

In its first week as the front month contract, May crude closed up 31 cents. Earlier in the week, Energy Information Administration data showed crude oil inventories increased 3.3 million barrels in the week ended March 20. Analysts were expecting a rise of about 1.2 million barrels. The build is the 22nd in 26 weeks.

Total motor gasoline inventories decreased by 1.1 million barrels last week, and are in the upper half of the average range. Distillate fuel inventories decreased by 1.6 million barrels.

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