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NEW YORK: Oil prices fell on Friday after news of a surprise decline in US consumer confidence in the world's biggest oil-consuming nation stirred concern about energy demand.
New York's main contract, light sweet crude for April delivery, dropped 87 cents to close at 81.24 dollars a barrel.
London's Brent North Sea crude for April shed 89 cents to settle at 79.39 dollars a barrel.
Earlier in the session the New York benchmark futures contract had climbed above 83 dollars.
"The market might be responding to the consumer confidence number that was worse than expected," said Jason Schenker of Prestige Economics.
The University of Michigan's consumer confidence index dropped for the second consecutive month in March, to 72.5 from 73.6 in February, instead of rising to 74.0 as analysts expected.
"That was a surprise to the market, and right now consumer confidence, especially in the face of rising gasoline prices, is a concern for some market participants," Schenker said.
The analyst said that "some profit taking" may have occurred because the market had gotten to 83 dollars, "and the market can be overreacting."
Analysts say that weak consumer confidence could curb energy demand as the world's largest economy struggles to recover from the worst recession in decades.
Independent trader Ellis Eckland said the market's movement was more a "trader game" ahead of the weekend.
"I don't think there is any fundamental news" behind price decline, he said. "It could be the traders not being comfortable being long ahead of the weekend."
The market still has "an excess of volatility... we have this choppy range in the lower 80s," he added.
Early in the session, oil prices got support from an upward revision of 2010 global oil demand by the International Energy Agency.
The IEA raised its forecast for global demand in 2010 to 86.6 million barrels per day (mbd) from its projection last month of 86.5 mbd - a 1.8 percent increase from 2009 demand levels.
The IEA warned that demand for oil, a strong indicator of economic activity, would not recover in advanced economies overall this year, but projected an "astonishing" growth trend of 28 percent in China.
"The IEA went far beyond just increasing demand expectations for China. They said that the demand growth we have seen so far is 'astonishing,'" said Phil Flynn of PFG Best.
"Despite all of these rising demand expectations, we have to ask ourselves if China is on an unsustainable path," he said.
"The Chinese bubble may the biggest threat to the global economic recovery," he added. - AFP/de
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