Domestic oil stocks, which rose to more than a three-year high last week, have eased traders' supply fears in the near term. And strong gains in the dollar, which persisted for the third straight day, exacerbated the downward pressure.
Crude futures, denominated in dollars, tend to move inversely to the currency. Friday morning, the dollar leapt to its highest level since October against the euro. It also reached its highest level in more than three months against the pound and the Swiss Franc.
Benchmark light, sweet crude prices for June fell as much as 54 cents in early trade Friday to $48 a barrel on the New York Mercantile Exchange, but traded more recently at $48.50, paring losses.
The contract ended overnight trade at $48.55 a barrel.
Since hitting a high earlier this week above $52, front-month oil prices have given up more than $4 on the barrel, but selling momentum appeared to be slowing a bit Friday.
Volumes were expected to start out weak, as traders hunted for clues as to which way the market might ultimately be headed.
"I think, as is often the case, no one wants to catch a falling knife," said Nicholas Dazzo, head of business development for Koch Supply & Trading LP in New York. Market participants likely will "wait for some stabilization of prices," he said, before straying from the sidelines. Buying interest was possible in the mid-to-upper $40s, he added.
Nymex gasoline and heating-oil futures for June also fell early Friday in sympathy with crude.
In London, Brent crude for June dropped as much as 33 cents to $48.01 a barrel in electronic trade on the International Petroleum Exchange. IPE gasoil futures for June rebounded from last session's sharp losses, rising 75 cents to $438.50 a metric ton.
In other commodity markets:
Metals: Once more, strength in the dollar undercut prices for metals, with the greenback claiming multimonth highs against the major currencies. On the New York Mercantile Exchange, gold for June delivery slipped another $1.20 to trade at $421 an ounce. Weakness was relatively restrained for copper and silver, following Thursday's sharp losses. July copper eased 0.6 cent to $1.37 a pound, while July silver gave back a penny to $6.955 an ounce. Also on Nymex, July platinum
lost another $5.40 to trade at $866.20 an ounce, while June palladium fell $2.40 to $189.50 an ounce.
--Mike Maynard, MarketWatch