New York: Oil eased toward $72 a barrel on Friday, a day after reaching a near eight-month high, pressured by a firmer dollar and views that prices have risen too far despite improving economic sentiment.

The market on Thursday settled at $72.68, the highest since Oct. 20 after a three-day rally, making it look overvalued to some analysts.

"Most commodity markets are still quite overbought and could be subject to a modest sell-off next week," said Edward Meir, analyst at MF Global. "We are getting to a stage where the steep run-up in prices has arguably over-discounted the modest brightening we are seeing in the U.S. macro picture."

U.S. crude fell 36 cents to $72.32 a barrel by 1820 GMT. London Brent crude fell 69 cents to $71.10.

Adding downward pressure, the U.S. dollar rebounded against the euro. A stronger dollar can weaken commodity markets by cutting into the purchasing power of buyers using other currencies.

The Organization of the Petroleum Exporting Countries, meanwhile, further areduced its forecast for world oil consumption this year, but said the worst appeared to be over for the oil market.

"As the world economy stabilizes, the world oil demand appears to be settling down," OPEC said in its Monthly Oil Market Report. "There are no significant downward revisions to our previous oil demand forecasts."

Two other closely watched forecasters, the U.S. Energy Information Administration and the International Energy Agency, slightly raised their demand estimates this week, after months of downward revisions.

Stronger-than-expected Chinese economic data helped limit oil's losses.

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