Brent crude prices fell to a five-month low near $105 a barrel on Thursday as a jump in U.S. jobless claims sparked a second day of heavy selling across oil markets.
Brent, U.S. crude and U.S gasoline futures have all lost near 5 percent over the last two trading sessions, with traders citing ample supplies and concerns about demand.
U.S. initial jobless claims hit a four-month high last week, a third consecutive rise, indicating the labor market recovery in the world's largest oil consumer slowed in March.
The job news followed the U.S. government's Energy Information Administration (EIA) report on Wednesday that showed crude oil inventories at a 22-year high.
"Data has been disappointing all week long, and the oversupply of crude just confirmed that," said Bill Baruch, senior market strategist at iitrader.com LLC in Chicago.
"Now the market is getting back to where we should be."
At 2:10 p.m. EDT (1810 GMT), Brent crude for May delivery was down $1.25 to $105.86 a barrel, having earlier touched a low of $105.29, the lowest since early November.
Brent tumbled $3.58 on Wednesday, its biggest one-day fall this year.
U.S. crude for May delivery was down $1.30 at $93.14 a barrel, having fallen to $92.12, the lowest intraday price since March.
U.S. RBOB gasoline futures extended this week's slide to almost 25 cents a gallon, falling by more than 1 cent to $2.90 a gallon, down from Monday's high above $3.14.
Stephen Schork, editor of the commodities newsletter The Schork Report, called the falling prices "the smoking gun showing we're in a market that got itself extremely overbought."
"Wall Street tipped its hand and made a very bad trade in trying to get long in RBOB gasoline, but now we're looking at normalized inventories and weak demand," he said.
Wednesday's EIA report showed four-week average gasoline demand was down 1.2 percent from year-ago levels.
Hedge funds and other large speculators had amassed bets on rising gasoline prices equivalent to more than 80 million barrels of the motor fuel as of March 26, data from the U.S. Commodity Futures Trading Commission showed last week.
That was up from around 59 million barrels four months ago.
JOBLESS CLAIMS AND JAPANESE STIMULUS
Thursday's U.S. jobless claims report arrives a day after a report of weaker-than-expected private-sector jobs growth in March, and a day ahead of the government's closely watched nonfarm payrolls report for March.
The Bank of Japan on Thursday said it would inject about $1.4 trillion into the economy in less than two years, pushing the dollar up sharply versus the yen as U.S. Treasury debt prices also advanced.
"The jobless claims added to the pressure after the Bank of Japan's decision to pump money created a big rally in the dollar and U.S. debt in a safe-haven play," said Phil Flynn, analyst at Price Futures Group in Chicago.
A stronger dollar can weigh on oil and other dollar-denominated commodity prices as they becomes more expensive for holders of other currencies.
(Editing by Bob Burgdorfer)