Crude oil prices plunged Thursday, dragging New York's main contract below $100 a barrel for the first time since March 16, after disappointing US jobs data and the dollar's rise spurred demand fears.
A view of the British Petroleum (BP) Carson refinery in Carson, California, - AFP
New York's main contract, West Texas Intermediate light sweet crude for June, closed at $99.80 a barrel, down $9.44, or 8.6 per cent, from Wednesday.
The WTI contract continued to fall after the market closed, heading toward $98 a barrel.
In London, Brent North Sea crude for delivery in June slumped $10.39 to settle at $110.8 a barrel.
Prices had moved sharply higher, with WTI almost reaching the $115 a barrel mark on May 2, amid Arab unrest and the nuclear crisis in Japan that unfolded after the March 11 earthquake-tsunami disaster.
"It has been a heck of a great trade. Everyone has been long oil," said Rich Ilczyszyn at Lind-Waldock.
"Then it became the quickest out of the trade. Everyone is trying to get out at the same time."
Booming commodities markets suddenly found themselves swept into sell-off mode in part spurred by a firming of the dollar, which makes dollar-priced oil and metals less attractive to investors.
The greenback gained ground against other major currencies -- particularly the euro, adding more than two cents, after comments by European Central Bank president Jean-Claude Trichet were more dovish than expected.
Oil prices also took a hit after a US jobs report signaled the labor market recovery was struggling, ahead of Friday's key April employment numbers.
Oil headed south "as doubts about the US economy and its ability to sustain demand growth trump geopolitical tensions," said John Kilduff at Again Capital.
New claims for US unemployment insurance benefits leaped to a whopping 474,000 in the week ending April 30, a 10 per cent increase from the prior week and an eight-month high, the Labor Department reported.
The rise surprised most analysts who had forecast a decline to 400,000.
CMC Markets analyst Michael Hewson added that oil was also under heavy selling pressure from fears of slowing economic growth around the world.
"Poor economic data out of the US and rising interest rate policies in China and India have prompted fears of growth slowdowns across the global economy, and therefore drops in demand, sending oil lower," he added.