Oil prices fell on Friday in choppy trading, finishing with a weekly loss as concerns that China's moves to cool inflation will curb energy demand, while slumping gasoline futures hit crude futures which had risen on news of surging Chinese imports.

For the third time in one month, China's central bank increased the amount of money lenders must keep on reserve, another move to rein in inflation.

US gasoline futures gave back most gains from the previous session when news of Hovensa LCC's shut gasoline-making unit at its St. Croix, US Virgin Islands refinery lifted prices.

US crude for January delivery fell 58 cents to settle at $87.79 a barrel, having seesawed between $87.10 and an early $89.00 peak.

Despite reaching a 26-month high of $90.76 on Tuesday, for the week US crude oil futures fell 1.57 per cent. Oil rose 6.48 per cent last week, its second straight weekly gain.

In the week to Tuesday, money managers raised net long crude oil positions on the New York Mercantile Exchange to a record, the Commodity Futures Trading Commission said.

That move above $90 just topped the $70-$90 a barrel price range that Saudi Arabia and Opec last month deemed acceptable to consumers and came as Opec prepared to meet on Saturday, with oil ministers expected to retain existing supply targets.

Total US crude trading volume was tepid, 518,771 lots, 22 per cent below the 30-day average.

ICE Brent crude for January delivery fell 51 cents to settle at $90.48 a barrel, slipping 1.03 per cent for the week.

'The market just continues to struggle in the high $80s,' said Tom Bentz, broker at BNP Paribas Commodity Futures in New York.

'The Chinese rise in November imports and exports is supportive but being offset by the China central bank raising reserves as well as the potential for an interest rate hike over the weekend.'

China's crude oil imports jumped 22.1 per cent last month from a year earlier to 5.09 million barrels per day, the fourth-highest monthly average on record.

The euro trimmed losses against the US dollar, drawing support from comments by European Central Bank President Jean-Claude Trichet saying the euro zone recovery was on track.

Earlier the dollar firmed against the euro as better-than-expected US economic data increased the allure of the greenback, with gains expected to continue if Treasury yields keep rising.

US Treasury prices fell, capping a week of relatively aggressive selling spurred by rising growth outlooks and deficit worries.

US stocks rose on upbeat data on consumer sentiment and trade, while bulls were encouraged as the S&P 500 held above a key technical level, the closely watched 61.8 per cent retracement of its drop from late 2007 to March 2009.

IEA, Opec views differ

Opec and the International Energy Agency had different demand outlooks for 2011 on Friday, as the IEA anticipated robust demand while producer group Opec said supply was plentiful.

The IEA, an adviser to 28 industrialized countries, in a monthly report lifted its 2011 oil demand growth forecast by 130,000 barrels per day to 1.32 million bpd.

Opec forecast 2011 global oil demand growth would increase to 1.18 million bpd, only 10,000 bpd more than predicted last month and making the case for no change in supply policy when oil ministers meet on Saturday in Quito.

Opec's secretary-general has said it wanted an improvement in oil market fundamentals before increasing crude supplies, even if prices go to $100 a barrel.

In addition to mulling supply and market share policy, Opec ministers will be reacting to news that Saudi Arabia is considering candidates to succeed long-standing oil minister Ali Al Naimi in a ministerial reshuffle that could happen in late February or early March next year. – Reuters