Oil prices fell below $96 a barrel Friday amid concern global crude demand will grow less this year than previously expected.
By early afternoon in Europe, benchmark oil for June delivery was down $1.12 to $95.96 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 27 cents to settle at $97.08 in New York on Thursday.
In London, Brent crude was down 87 cents at $111.86 per barrel on the ICE Futures exchange.
Crude has slumped about 10 percent from $106 last week as traders mull signs the economies of the U.S., Europe and China are slowing. Analysts are also eyeing rising U.S. crude inventories, which rose last week to a 22-year high while OPEC, led by Saudi Arabia, increased oil production by 320,000 barrels per day in April, according to Platts, the energy-information arm of McGraw-Hill Cos.
"The energy market is vulnerable to additional negative guidance from the U.S. economy, a slowing in the Chinese economic growth engine and a renewed heightening in European debt worries," energy trader and consultant Ritterbusch and Associates said in a report.
Despite the higher output from OPEC and the rising crude stockpiles, the International Energy Agency predicted oil prices would probably remain elevated.
"The path of market fundamentals for the rest of the year remains highly uncertain and geopolitical risks will likely continue to keep prices high," the Paris-based IEA said in its monthly oil market report released Friday.
The IEA raised slightly its estimate of global demand to 90 million barrels a day for 2012 — 80,000 barrels a day more than its previous prediction — driven mainly by the upward revisions to the IMF's growth forecast.
The IMF expects the world economy to expand by 3.5 percent in 2012 and by 4.1 percent in 2013, while in January it was predicting growth of 3.3 percent this year and 4.0 percent in 2013.
On the supply side, global oil production in April totaled 91 million barrels a day — 3.9 million barrels a day higher than in April 2011 — with most of the increase stemming from the extra OPEC output, the IEA said.
A stronger dollar also helped push down oil prices by making crude more expensive for investors trading in other currencies.
On Friday, the euro was down to $1.2935 from $1.2951 late Thursday in New York while the dollar rose to 79.96 yen from 79.91 yen.
In other energy trading, heating oil was down 2.15 cents at $2.9619 per gallon and gasoline futures slid 3 cents to $2.9802 per gallon. Natural gas fell 0.6 cent at $2.481 per 1,000 cubic feet.
Alex Kennedy in Singapore contributed to this report.