Oil fell 38 cents a barrel in choppy trade on Friday as stock markets seesawed and the April contract headed toward expiry.
U.S. stocks were little changed on Friday as financial shares fell after the tepid debut of a Federal Reserve measure to revive lending.
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.
The lower dollar supports dollar-denomianted oil, but a dollar bounce on Friday was seen pressuring crude.
U.S. crude for April, which expires on Friday, fell 38 cents to $51.23 a barrel by 12:55 p.m. EDT (1655 GMT). London Brent crude rose 15 cents to $50.82.
The sentiment that the economy may improve and that the Fed's moves may be inflationary has crude trying to put in a base above $50 after breaking out of its recent range, said Gene McGillian, an analyst at Tradition Energy in Connecticut.
Oil has tumbled $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, 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 with energy demand still weak, and some analysts cautioned it may be difficult for oil prices to sustain the recent rally.
We may have further to fall. We've got a lot of excess capacity right now and until we increase the spot price, flatten the contango and bring in that floating storage, it's going to be tough, said Simon Wardell, oil analyst at Global Insight.
Oil tanker shipping company Frontline said on Friday 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 day's worth of global oil supplies.
(Additional reporting by Christopher Baldwin in London, Raissa Kosolowsky in Dubai and Robert Gibbons in New York; Editing by David Gregorio)