Oil fell on Thursday as rising inventories and Chrysler's bankruptcy filing weighed on markets.
The Dow and the S&P 500 briefly turned negative and the Nasdaq trimmed gains as investors fretted about the likely fallout from Chrysler's bankruptcy filing.
U.S. crude fell by 29 cents to $50.68 a barrel by 1:12 p.m. EDT after earlier trading up to $51.94. Brent crude traded down 34 cents to $50.44 a barrel.
The markets have no follow through, they were following the stock market, said Dan Flynn, analyst at Alaron Trading in Chicago.
(Crude) tested resistance at $52 and then found no follow through testing support near $50. Crude seems to be stuck in a sideways pattern, he added.
Weak demand has sent oil off record peaks over $147 a barrel in July as the economic crisis saps consumption.
The U.S. Energy Information Administration revised down its estimate for February oil demand in the world's top consumer by 4 percent. The agency said demand in the month fell by over a million barrels per day, or 5.4 percent, compared to last year.
Rising U.S. inventories also weighed on crude. U.S. crude oil stocks swelled to a fresh 19-year high last week, according to weekly inventory data released by the EIA on Wednesday.
Gasoline stocks, however, showed a surprisingly steep 4.7-million-barrel drop ahead of gasoline season.
Earlier, markets found support after data showed the number of U.S. workers filing new claims for jobless aid fell by 14,000 last week, although continued claims reached a record high.
Iraq's oil minister said world oil markets seemed to be coming into balance.
Hussain al-Sharistani did not rule out a further cut in oil supplies by the Organization of Petroleum Exporting Countries at its next meeting on May 28.
Markets were also eyeing the swine flu outbreak. Mexico's president ordered a partial economic shutdown to slow the spread of the swine flu virus as officials urged increased precautions against an imminent pandemic.
Swine flu has become almost a sideshow for the oil market -- it might impact demand in specific areas like jet fuel, but if we can confirm the overall economy has bottomed, prices should slowly grind higher, said Paul Harris, analyst at Bank of Ireland.
(Reporting by Matthew Robinson and Robert Gibbons in New York, David Sheppard in London and Jonathan Leff and Maryelle Demongeot in Singapore; Editing by Christian Wiessner)