Crude oil fell on Thursday, pressured by ample supply, concerns about demand growth and a stronger U.S. dollar.
Brent prices slid sharply early in the day, dropping 60 cents a barrel within 13 minutes, while West Texas Intermediate (WTI) tumbled 90 cents over the same period.
Reasons for the sudden dive were not immediately clear. Traders pinned at least part of it on the U.S. dollar's rally to its highest in more than four years against a basket of currencies. The dollar drew support from a fall in U.S. jobless claims and Federal Reserve interest rate forecasts that were higher than those predicted in June.
The decline in the global benchmark Brent price was limited by a drop in Libya's output and talk of OPEC production cuts. Brent hit a 26-month low on Monday after data showing a slowdown in China's factory output raised demand concerns.
A stronger dollar makes dollar-priced commodities such as oil more expensive for buyers using other currencies.
"I think currencies are the focus," said Richard Ilczyszyn, chief market strategist and founder of iitrader.com LLC in Chicago. "The bottom line is that with the stronger dollar and dollar index basket rally... you can just take 10 percent off the top of commodity prices across the board. With all the geopolitical risk escalating overseas, oil should be popping. But (the falls are) all currency as far as I'm concerned."
hit its highest in more than four years against a basket of currencies amid indications that an increase in U.S. interest rates might happen faster than expected when the Federal Reserve starts tightening monetary policy. A stronger dollar makes dollar-priced commodities such as oil more expensive for buyers using other currencies.
Brent crude was down more than $1 under $98 a barrel. Prices have declined around 15 percent from a nine-month peak of $115.71 reached in June. U.S. crude tumbled $1.35 to settle at $93.07 a barrel a day, after dropping on government data that showed U.S. crude inventories rose 3.7 million barrels last week.
A setback in Libya's output, which has fallen by about 200,000 barrels per day, has put threats to supply higher on investors' list of concerns. Investors were also wary of Thursday's referendum on independence in Scotland, home to most of Britain's North Sea oil reserves. Analysts say the result could affect oil prices.
In addition, Nigerian oil unions have launched a strike they say could affect exports, although so far it has not, and the secretary-general of the Organization of the Petroleum Exporting Countries raised the possibility of a supply cut in 2015.