Oil prices steadied on Friday, holding this week's 8 percent slide on swelling U.S. stockpiles and slowing global demand growth.

U.S. crude oil settled up 13 cents at $48.67 a barrel on the New York Mercantile Exchange (search), ending a steep slide from this week's Tuesday peak of $53.10. London's Brent crude rose 32 cents to $48.66 on the International Petroleum Exchange (search).

This week's sell-off began with U.S. government data on Wednesday that showed U.S. oil inventories rising to a six-year high of 329.7 million barrels due to strong imports.

Bearish sentiment was encouraged by a report from the International Energy Agency (search) showing slower growth in oil demand from China and the United States, due in part to this year's inflated energy costs.

Many in the energy market, however, are doubtful the sell-off will continue too much further as the industry prepares for peak demand later this year and speculative funds view the slide as a buying opportunity.

"Clearly, North American inventories have been building up and that's something people have been focusing on, but the overall situation remains that the market is extremely tight," said Ian Henderson of JP Morgan Fleming.

Strength in the U.S. dollar on Friday also reduced oil's chances for a recovery by drawing away some speculative buying. A stronger dollar makes dollar-denominated oil more expensive for investors using other currencies.

On Friday, the U.S. dollar hit a seven-month high against the euro .

The last time U.S. crude stocks were as large, the price of oil was around $20 a barrel.

But a key difference between now and then is that spare production capacity has been all but eliminated as the Organization of the Petroleum Exporting Countries (search) is pumping flat out.

Another major contrast is higher demand from big Asian consumers China and India, along with continued growth in energy use in the United States.

On Friday, analysts said China's crude oil imports for April were 23 percent higher than a year ago and had reached an all-time monthly high of 12.25 million tonnes.

Other indications have suggested Chinese energy demand growth could be slowing.

The International Energy Agency in a monthly report published this week said incremental demand in China and also Europe and the United States was less than expected

Some analysts predict OPEC, which next meets in Vienna in June, will cut back supplies to prevent prices falling too far, though some have suggested that if the U.S. dollar continued to strengthen that could stay their hand.

A stronger dollar boosts the spending power of producer countries, including OPEC nations.

U.S. consumer sentiment fell in early May as record high fuel prices weighed and more expensive crude shipments boosted the cost of U.S. imports last month, according to two separate reports released on Friday.