Oil slipped only slightly to near $52 a barrel on Friday, after surging by nearly 9 percent the day before, as global markets viewed the outcome of the G20 summit as paving the way for some risk appetite to return.

Oil made its largest one-day percentage gain in three weeks on Thursday as markets rallied after world leaders at the summit announced a trillion-dollar deal to act on the economic crisis.

U.S. light crude for May delivery fell 42 cents to $52.22 a barrel by 1218 GMT (8:18 a.m. EDT), down from Thursday's $4.25 gain that lifted the contract to $52.64.

London Brent crude fell 28 cents to $52.47.

Some market watchers said recent price rises in the crude market, in spite of low demand and heavy supply, were likely to be a sign investors were turning to investments seen as involving more risk, which can include oil.

The last two weeks has been fairly encouraging, said David Dugdale, a London-based energy analyst at MFC Global Investment Management.

(U.S. Treasury Secretary Timothy) Geithner's procedures for quantitative easing and yesterday's G20 seem to have provided enough for the bulls to now move into risk assets.

The market on Friday will keep a keen watch on economic data, including U.S. March unemployment, non-farm and manufacturing payrolls to gauge the health of the world's largest economy.

WHERE NOW?

Analysts at J.P. Morgan wrote in a note to investors that recent OPEC production cuts seem to have tightened supply, and said a build in U.S. crude oil in the last three weeks was an inventory head fake -- a false signal of direction.

If there was truly a significant global surplus, you would not only expect crude oil stocks to be building onshore, but you would also expect the contango on global benchmarks to be widening.

Contango is a market term meaning prices for future delivery are above current levels. When there is a wide contango it pays for some investors to store oil on ships to sell at a later date.

In the past month the spread for Brent futures has narrowed from $1.44 on March 3 to around $1.23 on Friday, according to Reuters data.

The tightening of spreads had meant that the floating storage play is no longer as profitable as it once was, J.P. Morgan analysts wrote.

In January, oil majors, traders and OPEC producers were thought to be storing 60-70 million barrels of oil at sea, mostly in the U.S. Gulf, with Norway's Frontline estimating the armada of tankers holding up to 80 million barrels.

ENCOURAGING WEEKS

U.S. factory orders rose in February for the first time in seven months, and a rebound in China's official purchasing managers' index (PMI) in March showed the Chinese economy may have bottomed, China's chief statistics official said on Friday.

European shares were lower at midday on Friday in a choppy session, on track to snap a three-day rising streak as investors awaited the U.S. job data. Miners reversed early gains while auto makers rose.

The euro was down against the dollar but pared earlier losses and gained against the yen, while sterling also rose after better-than-expected euro zone and UK services sector data.

A poll showed the ailing U.S. economy probably continued to bleed jobs rapidly in March, driving up the jobless rate at a high pace.

(Additional reporting by Fayen Wong in Perth, editing by Anthony Barker)

Energy OPEC Down