By Sarah Kent Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Crude futures tumbled Thursday, retracing most of Wednesday's gains as concerns over the outlook for the global economy and a stronger dollar weighed on prices. At 1014 GMT, the front-month August Brent contract on London's ICE futures exchange was down $2.46, or 2.2%, at $111.75 a barrel. The front-month August contract on the New York Mercantile Exchange was trading down $1.81, or 1.9%, at $93.60 a barrel. Analysts highlighted that the steep drop in prices came in the wake of a strong rally Wednesday, which saw Brent climb more than $3.00 a barrel. Oil prices strengthened throughout the day, supported by a greater-than-expected decline in crude stockpiles reported by the U.S. Department of Energy. But analysts said this did not really justify the steep gains seen in prices. "The rally yesterday was difficult to explain...now it seems the players are looking at it and wondering what happened," said Torbjorn Kjus, oil market analyst at DnB NOR. "I don't think we would be falling [this much] if we hadn't had a rally of almost $4.00 a barrel yesterday," he added. A stronger dollar helped push prices lower, after the U.S. Federal Reserve Chairman Ben Bernanke quashed speculation over a third round of quantitative easing on Wednesday, boosting the greenback. Ongoing concerns over the debt crisis in Greece also kept the euro under pressure. Oil prices typically fall when the greenback strengthens as the dollar-denominated commodity becomes more expensive. At 1014 GMT, the euro was at $1.4247, down from $1.4356 late Wednesday in New York. Adding to the negative outlook were concerns over global growth and demand for oil. The Federal Reserve downgraded its assessment of the U.S. economy Wednesday, lowering its growth forecast for 2011 to a rate of expansion of 2.7% to 2.9%, compared with earlier estimates of 3.1% to 3.3%. It also lowered its expectations for growth in 2012 to 3.3% to 3.7% from estimates of 3.5% to 4.2% in April. Elsewhere, the preliminary HSBC Chinese Manufacturing Purchasing Managers Index, a gauge of nationwide manufacturing activity, fell to an 11-month low of 50.1 in June from a final reading of 51.6 in May, sparking fears that Chinese demand for crude could ease. "There is all round general weakness. Everything is pointing to weaker terms right now," said Robert Montefusco, senior commodity broker at Sucden Financial. Investor focus is now seen shifting to U.S. data on weekly jobless claims due at 1230 GMT and Friday's final estimate of the nation's first quarter GDP. At 1014 GMT, the ICE's gasoil contract for July delivery was down $10.25, or 1.1%, at $916.25 a ton, while Nymex gasoline for July delivery was 525 points, or 1.8%, lower at $2.9208 a gallon. -By Sarah Kent, Dow Jones Newswires; 4420-7842-9376; sarah.kent@dowjones.com

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