Oil eased to $72 a barrel on Friday pressured by a firmer dollar, but stronger-than-expected Chinese economic data helped support prices near an eight-month high.
The market on Thursday settled at $72.68, the highest since Oct. 20 after a three-day rally, making it look overvalued to some analysts. The dollar gained, reducing the investment appeal of oil and commodities.
"We believe most commodity markets are still quite overbought and could be subject to a modest sell-off next week," said Edward Meir, analyst at MF Global.
"We are getting to a stage where the steep run-up in prices has arguably over-discounted the modest brightening we are seeing in the U.S. macro picture."
U.S. crude fell 61 cents to $72.07 a barrel by 0855 GMT, after reaching a 2009 intra-day high of $73.23 on Thursday. London Brent crude fell 54 cents to $71.25.
Official figures showed a rebound in China's industrial growth and retail sales in May, following on from U.S. data on Thursday showing an increase in retail sales and a slowdown in weekly jobless claims.
"The downward movement is the usual two steps forward, one step back. Some market players may be a bit cautious about oil prices being a little overvalued," said Ben Westmore, a commodities analyst at National Australia Bank.
Data also showed refinery output in the world's number two energy user rose 10.7 percent in May versus a year earlier, in its third monthly rise in seven months to a fresh record high.
Two closely watched oil forecasters, the U.S. Energy Information Administration and the International Energy Agency, raised their forecasts for 2009 global oil demand this week, after months of downward revisions.
The Organization of the Petroleum Exporting Countries (OPEC), which pumps more than a third of the world's oil, is due to issue its monthly oil market report later on Friday.
Concern over tightening gasoline supplies have given oil an extra boost this week.
U.S. energy firm Valero said on Thursday it will shut its refinery on the Caribbean island of Aruba for the summer due to weak profit margins. The U.S. has already been hit by a spate of refinery outages in recent weeks.
