NEW YORK (CNNMoney.com) -- Oil prices fell Thursday amid choppy trading, as investors sought direction after the government's disappointing initial jobless claims report and the dollar strengthened.
What prices are doing: The price of crude oil for May delivery fell 33 cents to settle at $85.51 a barrel.
Prices soared 2% Wednesday after the government reported the first drawdown on crude supplies in 10 weeks and a round of economic data showed strong improvement in retail sales and low inflation.
May contracts expire April 20. Trading volume in crude for June delivery is picking up. Prices for that contract settled down 2 cents at $86.72 a barrel.
What's moving the market: Crude prices seesawed within a tight range on Thursday, as traders sought direction after the government's disappointing weekly initial claims report.
The Labor Department reported an unexpected rise in initial jobless claims last week, compared to a 20,000 dip economists surveyed by Briefing.com expected.
But the government attributed the increase to seasonal volatility and the Easter holiday, helping to allay fears that the economy is approaching a double-dip recession. Crude prices rose as much as 43 cents on the news, before falling again.
The dollar, however, continued to strengthen, rising 0.6% against the euro to $1.356 amid higher costs of insuring Greek bonds against default. Increased costs to insure against default signals continued wariness about the region's fiscal stability.
A stronger dollar makes crude, which is denominated in the U.S. currency, more expensive for foreign investors. This tends to push down demand and prices.
What analysts are saying: "The economic news is spotty at best," said Mike Fitzpatrick of MF Global, who attributes the earlier run-up in the price of crude to speculators banking on a rebound in demand.
But Fitzpatrick forecast oil prices would be lower into the weekend because "prices at these levels aren't supported by demand."
On Wednesday, the U.S. Department of Energy reported a surprise decline in crude inventories last week. But stockpiles are still 10.1% above historical averages, according to analysts at The Schork Group.
Although jobs data is among the factors influencing buy and sell decisions for oil, Fitzpatrick says the economic recovery is "fragile at best" and prices won't be sustainable.
Looking ahead: A number of reports, including the closely watched Michigan Consumer Sentiment Index and housing starts is due out Friday. Positive results could send oil prices higher.
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