Crude oil prices fell from a one-year high above $78 a barrel on Friday, as investors questioned whether an $8-a-barrel rally since last week was warranted with global oil stocks still high.
Inventories of crude oil and refined products in the United States, the world's largest energy consumer, remain above year-ago levels.
If you look at the stock situation you will not be buying. There is still an awful lot of stocks, Rob Montefusco, an oil trader with Sucden Financial in London, said.
U.S. crude oil futures fell for the first time in seven days of trading, retreating by 23 cents a barrel to $77.35 by 1705 GMT (1:05 p.m. EDT), after they rose to a one-year high of $78.17 earlier Friday.
Brent crude was down 32 cents at $75.91.
U.S. crude and product stocks, excluding strategic reserves, remained above 1.1 billion barrels in the week through October 9, according to weekly Energy Information Administration data released Thursday. Stocks were up from year-ago levels of 976 million barrels.
Oil prices also fell on a strengthening dollar and waning U.S. consumer confidence that could stall any recovery in fuel demand. A stronger dollar makes oil more expensive for holders of other currencies.
The dollar strengthened 0.2 percent on Friday from a 14-month low against a basket of foreign currencies. <.DXY>
Oil prices have been rising as optimism surrounding an economic recovery led investors to take more risk, selling dollars and plowing funds into commodities and equities.
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The Reuters/University of Michigan Surveys of Consumers said its preliminary index of sentiment for October fell to 69.4, from September's 73.5, due to a dismal state of personal finances. U.S. government data showed refineries sharply reduced their utilization rates last week.
U.S. industrial production rose in September for a third consecutive month, Federal Reserve data showed Friday. (Additional reporting by Gene Ramos in New York, Ikuko Kurahone in London and Jennifer Tan in Singapore; Editing by Christian Wiessner)