Oil futures fell Friday on persistent demand concerns and on worries that crude's recent rally may have been overdone. A stronger U.S. dollar also weighed on dollar-denominated oil prices. Crude for May delivery fell $1.09, or 2%, at $53.27 a barrel in early North American electronic trading. "The still-poor demand picture may once again become a dominant theme if an equities setback dampens the hopes of oil bulls," said Brenda Sullivan, an analyst at Sucden Financial Research. "Note that the six weeks of price gains seem to have changed the weekly and monthly technical patterns to suggest that a price base may be in place now," she said in a research note. Oil prices have rallied 17% in the past two weeks. Despite Friday's decline, crude is set to end the week up about 2%. In the currency markets, the dollar rallied versus most major rivals, while a budget warning from Germany's finance minister pressured the euro Friday. The dollar index , a measure of the greenback against a trade-weighted basket of rival currencies, rose 1.1% to trade at 84.93. See Currencies. Greenback strength typically pressures dollar-denominated commodities such as oil and gold, because it makes them more expensive for holders of other currencies. "We think the markets will encounter rather stiff resistance between $55 and $60, as we suspect this band will cap the top end of the trading range for most of 2009," said Edward Meir, an analyst at MF Global. "Nevertheless, picking points to short the market is not advisable right now, as it is perhaps best to let things run their course, and wait for a decisive break back down into the trading range," Meir said in a note to clients. In other news, Ecuador's energy minister said his country will reduce its crude output by 8% next month to meet reduced quotas set by the OPEC oil cartel, the Associated Pres reported Friday. The move will reduce Ecuador's production to 460,000 barrels a day from 500,000, according to the report. Elsewhere in Latin America, Venezuela's oil minister said Friday that OPEC could cut crude output further when it meets on May 28 in Vienna, the AP reported. Also on Globex, April reformulated gasoline fell 3 cents to $1.50 a gallon and April heating oil dropped 1 cent to $1.47 a gallon. April natural gas futures fell 1 cent to $3.94 per million British thermal units.

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