Oil fell to three-month lows of around $114 per barrel on Friday and was on course for its steepest weekly fall since December after a weak U.S. jobs report added to doubts about the pace of economic recovery in the world's biggest oil consumer.
U.S. employers hired 115,000 workers last month, the Labor Department said on Friday, which was below the 170,000 new jobs forecast, and led to worries that growing appetite for oil could stall.
"The poorer U.S. economic data from the past two days have sparked doubts that oil demand will recover in the U.S., the world's largest consumer of oil," Commerzbank oil analysts Carsten Fritsch and Eugen Weinberg said in a note.
By 1344 GMT, Brent crude oil futures lost $2.08 to $114 a barrel, lows not seen since early February this year, having touched earlier intra-day lows of $113.82 per barrel earlier in the session.
U.S. crude fell by $2.27 to $100.27, levels not seen since February.
"The report disappointed the market as employment increased by only 115,000 jobs ... Oil markets were already under severe downward pressure overnight as global equities swooned (except Japan) on fears that macro conditions are beginning to deteriorate at a faster pace," Addison Armstrong, senior director of market at Tradition Energy, said in a note.
Analysts are seeing increasing downside risks to prices. Nic Brown, Natixis' head of commodities research, said the bank's models indicate fair value for Brent at $110 a barrel.
"Anything north of $120 contained a large amount of political premium as the negotiations between Iran and the West appeared to make some progress, and clearly some of the premium has been taken out," Brown said. "The very tight supply picture from earlier in the year has also eased a little."
Oil and commodities also plunged across the board on Thursday as slower-than-expected growth in the U.S. services sector sparked a wave of selling and prices crashed through technical support levels.
"Many funds are still on the long side of crude oil, but the global economic recovery remains something a bit elusive," said Olivier Jakob from Zug-headquartered consultants Petromatrix.
Brent has so far fallen by around 4.7 percent this week, its steepest slide since the week ending Nov. 20, while U.S. oil has lost around 4.3 percent.
"CFTC (Commodity Futures Trading Commission) data over the last couple of weeks has seen investors cutting back on exposure to futures, so with less support in terms of commitment and a low volatility environment, people are taking profits on oil," BNP Paribas head of commodities strategy Harry Tchilinguirian said.
OPEC, STOCKS, IRAN
The Organization of the Petroleum Exporting Countries is working hard to bring down prices that jumped towards $130 a barrel earlier this year, its secretary general said on Thursday, and is pumping much more than its official target even as exports from member country Iran dwindle.
U.S. crude inventories rose for a sixth straight week last week to the highest level since 1990 as stocks at the Cushing, Oklahoma hub shot up to a fresh record, according to weekly data from the U.S. Energy Information Administration on Wednesday.
Defiant statements from Iran on Friday failed to provide support for prices, even though an envoy said the country would never suspend its uranium enrichment programme and saw no reason to close the Fordow underground site.
Brent has gained 6 percent this year, touching a high of over $128 in March, on concerns that the tensions with over Iran's disputed nuclear programme would disrupt supplies from the Middle East.
"When you have a safe place, secure place under IAEA control, then why do you tell me that I should close it?" Iran's ambassador to the International Atomic Energy Agency, Ali Asghar Soltanieh, told Reuters. "Fordow is a safe place. We have spent a lot of money and time to have a safe place," Soltanieh added.
Iran and major powers resumed talks in mid-April in Istanbul after a gap of more than a year. Investors viewed the resumption as a chance to ease escalating tension and help to avert the threat of a new Middle East war. They are to meet again on May 23 in Baghdad.
The five permanent members of the U.N. Security Council said they expected talks with Tehran to lead to concrete steps toward a negotiated solution. (Additional reporting by Robert Gibbons in New York and Manash Goswami in Singapore; Editing by Alison Birrane and Jane Baird)