Oil futures ended essentially flat Friday, giving up much larger earlier gains as traders sold to book profits from crude's recent 10 percent price rally.Volatility was the day's watchword, as prices alternated on mixed news from OPEC and competing views about the economy and demand for oil. The Organization of Petroleum Exporting Countries trimmed its demand forecasts for this year by 100,000 barrels a day but hinted that it may cut production if global supplies of crude continue to rise, according to Dow Jones Newswires.

"It's always on the mind of traders what OPEC is going to do," said Addison Armstrong, director of exchange traded markets at TFS Energy Futures LLC in Stamford, Conn.

Earlier in the week, prices rose on Venezuelan President Hugo Chavez's threat to cut off oil shipments to the United States in retaliation for Exxon Mobil Corp.'s success in convincing courts in the U.S. and Europe to freeze Venezuelan assets. Exxon has taken Venezuela to court over last year's nationalization of an oil field.



Several reports in recent days have suggested that economic conditions may not be deteriorating as quickly as feared. On Friday, the Federal Reserve said industrial production rose last month in line with analyst expectations. On the other hand, the Energy Department, the International Energy Agency and now OPEC have all cut demand growth forecasts for this year. At the same time, domestic oil supplies have risen for several weeks.

"I think we're just finally coming back down to earth," said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.

Light, sweet crude for March delivery inched up 4 cents to settle at $95.50 on the New York Mercantile Exchange after alternating frequently between positive and negative territory. Oil prices have risen more than $8 in little more than a week.

In recent days, many analysts have questioned oil's price strength in the face of falling demand.

"It makes no sense," said Tom Kloza, publisher and chief oil analyst at the Oil Price Information Service in Wall, N.J., who suggested speculators may be behind the recent rise. "I think it's financial and it's speculative."

Markets that rise quickly on speculative money often fall even faster, analysts say.

At the pump, meanwhile, gas prices rose 0.5 cent overnight to a national average of $2.984 a gallon, according to AAA and the Oil Price Information Service. Retail prices, which typically lag the futures market, have drifted higher in recent days, following oil's recent rally.

Other energy futures were mixed Friday. March gasoline futures rose 1.77 cents to settle at $2.4938 a gallon on the Nymex, while March heating oil fell 1.97 cents to $2.6469 a gallon. March natural gas fell 11.2 cents to $8.66 per 1,000 cubic feet.

In London, April Brent crude futures fell 53 cents to $94.63 a barrel on the ICE Futures exchange.