Oil prices tumbled Thursday, with U.S. crude dropping 4 percent as investors booked profits a day after a surge to five-month highs tested key technical levels.

U.S. gasoline futures led the oil complex lower as refiners returned from seasonal maintenance at a time of weak demand, and amid a sell-off across commodity and equities markets.

The New York Mercantile Exchange oil futures contract caught a strong sell signal on the Relative Strength Index (RSI) the day after it rose over 70 on a 14-day moving average -- usually interpreted as a sell sign.

The RSI dipped to 61.3 on Thursday as prices fell, after U.S. crude bounced off a long-term trendline after weeks of gains that were capped by a $3 rise on Wednesday in heavy spread trading.

"We're almost into a seventh week of gains in U.S. crude and that has prompted some investors to take some profits," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.

In London, ICE Brent crude for January delivery settled at $108.22 a barrel, dropping $3.66, or 3.27 percent, front month Brent's the biggest one-day percentage loss since Oct. 17. In early trading, the contract broke below its 100-day moving average of $111.38.

U.S. crude for December delivery, which expires on Friday, settled at $98.82, down $3.77, or 3.67 percent, the biggest one-day percentage loss for front-month crude on the New York Mercantile Exchange since Sept. 28.

U.S. crude jumped on Wednesday following news of a pipeline reversal in the Midwest that will ease a glut of crude around the Cushing, Oklahoma delivery point for the NYMEX contract.

The premium of Brent to U.S. crude, which ballooned to over $28 a barrel in October due to the rising Midwest inventories, tumbled $3 to $9 a barrel on Wednesday and dropped below $8 at one point on Thursday, as traders digested the impact of the Seaway pipeline reversal.

"Yesterday's rally (on U.S. crude) after the announcement of the Seaway pipeline reversal was more of a reactionary move related to Brent/WTI spread liquidation," said Tom Bentz, director at BNP Paribas Prime Brokerage Inc in New York.

"But the reality is that more crude making its way into the (U.S.) Gulf. Let alone the fact that a larger amount of refiners in the Gulf will have more access to higher grades of sweet crude to process into products," Bentz added.           

U.S. and Brent crude trading volumes were about 15 percent over the 30-day average, preliminary Reuters data showed. The selling came as traders kept an eye on the euro zone, where the debt crisis threatened to engulf France and Spain.

Selling sent the commodities on track for their biggest loss since September, while U.S. stock markets fell as nervous investors bailed out of the market.

The euro trimmed gains against the dollar after the sharp losses on Wall Street and on commodities.

(Additional reporting by Robert Gibbons in New York; Jessica

Donati in London; Manash Goswami in Singapore; Editing by Marguerita Choy, Matthew Robinson, and David Gregorio)