Oil prices were volatile around $73 a barrel Friday, following swings in the dollar's exchange rate and as investors continued to sell off stocks and commodities amid doubts about the global economic recovery.
By early afternoon in Europe, benchmark crude for March delivery was up 16 cents at $73.30 a barrel in electronic trading on the New York Mercantile Exchange. Earlier in the session, it fell to $72.46 and rose as high as $73.64.
On Thursday, the contract fell $3.84 to settle at $73.14, the biggest one-day drop in four months.
Global stock markets slumped amid concerns about high debt levels in Greece, Portugal and Spain and high unemployment in the U.S. Oil traders often look to stock markets as a measure of overall investor sentiment.
The Dow Jones industrial average slid 2.6 percent Thursday and all major Asian and European indexes fell on Friday.
Friday's release of U.S. non-farm payrolls are expected to help set the market's direction over the coming days.
Crude investors are also watching the dollar since they often buy commodities such as oil as a hedge against inflation and sell when the U.S. currency strengthens.
The euro fell to $1.3693 on Friday from $1.3726 on Thursday while the dollar rose to 89.39 yen from 89.00 yen.
"The equities and energy markets heard reality calling," Michael Sander of Seattle-based Sander Capital Advisors said in a report. "With the dollar showing extreme strength and equity markets consolidating, I still think oil could trade down to $70."
Many analysts repeated the view that January's surge in oil prices was a result of the flow of speculative funds into commodities instead of an increase of real demand.
"While oil prices will continue to swing wildly on the skittish behavior of the financial markets, there is little doubt that investors want to push oil prices higher and over time economic indicators are likely to be gradually more supportive," said a report from KBC Energy Economics in Britain.
In other Nymex trading in March contracts, heating oil was down 0.47 cent at $1.9305 a gallon, and gasoline fell 0.58 cent to $1.9450 a gallon. Natural gas rose 4.6 cents to $5.462 per 1,000 cubic feet.
In London, Brent crude was down 14 cents at $71.99 on the ICE futures exchange.
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