Crude oil was pushed lower on Thursday by fears of further turmoil in the euro zone, as Cyprus scrambled to avoid bankruptcy, and by manufacturing data which showed a deepening downturn in the currency bloc.
Brent crude for May delivery fell 44 cents to $108.28 a barrel by 1052 GMT. U.S. crude for May was at $93.08, down 42 cents.
Debt-laden Cyprus continued to seek a new plan to find billions of euros to qualify for a European Union bailout needed to avert financial meltdown.
The Mediterranean island is considering nationalising pension funds and is keeping banks shut until next week after it rejected a bank deposit tax required by a European Union bailout and turned to Russia for aid.
Meanwhile, flash euro zone manufacturing showed unexpected declines in March, driven by surprise weakness in the German and especially French purchasing managers' indices (PMI).
Most responses in Markit's business survey were received before Cyprus pushed the 17-nation currency bloc into fresh turmoil and analysts said respondents may now be even more gloomy.
The Flash Eurozone Composite Purchasing Managers' Index fell to 46.5 in March, lower than all forecasts in a Reuters poll of 23 economists.
However, losses in the oil market were limited by better-than-expected Chinese manufacturing data which pointed to an improved fuel demand outlook in the world's second-largest oil user.
SOLID, NOT SPECTACULAR
China's manufacturing sector growth in March, as shown in a preliminary survey of factory managers on Thursday, pointed towards solid but not spectacular first-quarter growth in the economy.
"The Chinese data is better than expected but it's not extraordinary," said Olivier Jakob, oil analyst at Petromatrix. "Crude oil imports in China for the first two months were lower than last year."
"Still, we need to see what is going to happen to Cyprus."
In China, the HSBC Purchasing Managers' Index for March revived to 51.7 in March from 50.4 in February, but remained below a two-year high of 52.3 reached at the beginning of the year.
The reading is consistent with year-on-year GDP growth of around 8 percent, according to a Credit Agricole-CIB analyst, above the 7.5 percent GDP growth target for 2013 released at the annual legislative session this month.
Some analysts argue that the demand outlook is strengthening because of improving macroeconomic conditions in the United States.
"The current improvement in economic growth is mainly driven by the United States. So the recovery is less commodity intensive than previous ones, when China was the main driver. Nevertheless, it is still an improvement", said Credit Suisse's Tobias Merath in a note.
The U.S. Federal Reserve's pledge to continue efforts to stimulate the world's largest economy also supported prices.
"The rally in the U.S. has been a good one, but before we really pop we need more proof and confidence," said Carl Larry, president of Houston-based Oil Outlooks and Opinions.
He said U.S. jobless claims out later on Thursday would be a good indicator of the economy's outlook. (Additional reporting by Florence Tan in Singapore; Editing by Tom Pfeiffer)