Oil prices backed off a multi-month high on Friday in early trading as investors bet a recent rally was overdone.
Light sweet crude fell to $52.49, down $1.85 for the session. Prices touched as low as $52.30 in early trading after challenging $55 in recent days.
Oil's hedge appeal declined as the dollar spiked higher versus the euro and sterling Friday morning in New York as demand from riskier currencies waned. After suffering steep losses last week, the dollar has rebounded away from a 10-week low against the euro and also gained on the pound.
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.
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.
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.At 356.6 million barrels, U.S. crude oil inventories are above the upper limit of the average range for this time of year.
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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