* ICE Brent trades near 18-month highs around $87
* U.S. crude prices depressed by options expiry -sources
* Coming Up: U.S. housing starts for March; 1230 GMT (Updates prices)
By Alejandro Barbajosa
SINGAPORE, April 16 (Reuters) - U.S. crude dropped to below $85 on Friday as concerns about U.S. demand re-emerged and the dollar strengthened, making imports more expensive for emerging economies where consumption is surging.
An unexpected jump in the weekly number of U.S. workers filing new jobless benefit claims tempered sentiment across markets on Thursday. [
]"We had slightly disappointing weekly jobless claims numbers that triggered some caution in the oil market," said Toby Hassall, an analyst at CWA Global Markets Pty Ltd in Sydney.
U.S. crude for May delivery <CLc1> fell 68 cents to $84.83 a barrel by 0736 GMT, more than $2 lower than an 18-month high above $87 reached last week. The dollar gained almost 0.3 percent against a basket of currencies.
The greenback found support after the Treasury Department said foreign purchases of U.S. securities rose in February as strong private sector demand helped reverse an overall capital outflow suffered during the prior month. [
]"A firmer dollar today is probably a factor weighing on prices. High inventories of crude in the United States reflect the fact that the fundamentals are still soft; we are still seeing oversupply," Hassall said.
For a technical outlook on U.S. crude, click [
]Strong economic data out of China painted a different outlook for demand across Asia, giving relative support to prices of London-traded ICE Brent crude, the benchmark for most of the oil produced in Europe, Africa and Asia.
Soaring growth in the Chinese economy, which posted annual expansion of 11.9 percent in the first quarter, could prompt a revaluation of the yuan, which may boost oil demand by increasing China's buying power. [
]BRENT, U.S. CRUDE DIVERGE
The May Brent <LCOc1> contract reached 18-month highs just before it expired on Thursday. The June contract, now the front-month contract, was trading about $1 higher than the equivalent contract for U.S. crude on Friday, shedding 42 cents to $87.17.
"The Chinese GDP number was certainly very strong and that just reinforces the oil market," Hassall said. "Emerging economies have played a key role in supporting oil demand over the past 18 months, while OECD has suffered from the slump in economic activity."
May Brent settled at $87.17 on Thursday, the highest close since front-month Brent ended at $90.25 on Oct. 3, 2008. Brent's $87.58 intraday peak was the highest since $87.99 was struck on Oct. 7, 2008. For a factbox on Brent's premium: [
]At settlement on Thursday, the Brent futures premium to U.S. crude of $1.66 was the highest since mid-December. [
A strike by Gabon's main oil union has cut about 60 percent of the African nation's 250,000 barrels per day of crude production, which competes with Brent. [ID:nLDE63E153]
On the other hand, the expiration of May U.S. crude oil options helped restrain U.S. prices on Thursday, traders said.
"The market is going to continue to look for evidence of improvement in demand and economic activity generally," Hassall said.
Barclays Capital's technical team said in a note to clients that a corrective phase that had dominated the last week or so of oil trading was now over and the next targets were significantly higher. [
]"Following five days of modest lower closes, Brent crude is pressuring the top of a bullish flag-like pattern," Barclays Capital said. "Brent is ready to test $88.15 per barrel, then $90.00." (Editing by Clarence Fernandez)