Brent crude fell to an eight-month low near $104 a barrel on Friday and was on course for the biggest weekly slide since June, as a weak U.S. jobs report fed worries about the economy in the world's largest oil consumer.
The U.S. Labor Department reported that employers added meager 88,000 jobs in March, the slowest pace of hiring in nine months. The jobless rate ticked 0.1 point lower to 7.6 percent, largely due to people dropping out of the workforce.
Brent crude oil prices were on course for the biggest weekly loss in 10 months, down more than 5 percent, and have fallen by around $15 a barrel since early February.
Richard Ilczyszyn, founder and chief market strategist at iitrader.com LLC in Chicago, said traders were far less optimistic about the strength of oil demand than at the start of the year.
"Every first quarter bodes well for energy prices because we're optimistic," he said.
"But we had gone up so far, so fast without real improving data. We saw today with the jobs report translating into lower energy prices that it was not a real rally, but more of an easy-money rally."
Brent crude for May delivery was down $2.21 at $104.13 a barrel, having touched $104.04, its lowest price since August.
The price of the Brent May contract was about 5 cents below that for June delivery, the first time in 10 months the front-month contract has priced at a discount to the second - a market structure known as contango that can indicate weak demand.
U.S.crude dropped 90 cents to $92.37, off an earlierlow of $91.91 a barrel.
69 cents to $92.57, off an earlier low of $91.91 a barrel. U.S. crude has fallen by almost 5 percent this week, its biggest weekly loss since September. Its discount to Brent , however, narrowed to less than $12 a barrel for the first time in over nine months.
U.S. data has disappointed all week with weaker-than-expected growth in manufacturing, private-sector hiring and employment. A surge in U.S. crude inventories to the highest since 1990 has further pressured prices.
Oil and commodities markets started 2013 in a buoyant mood on hopes of a sharp revival in global economic activity.
However, this optimism faded through the first quarter as data showed slower-than-expected growth in emerging economies, deepening recession in parts of Europe and a tepid expansion in the United States.
Even an aggressive move by the Bank of Japan to pump more than $1.4 trillion into the economy in less than two years failed to lift investor confidence.
Equity markets also fell, with the U.S. S&P 500 on track for its worst weekly performance of the year
Abdallah Al-Badri, Secretary General of the Organization of the Petroleum Exporting Countries, said on Thursday oil prices were at a comfortable level for both producers and consumers.
But Badri told an oil conference in Paris that "if prices fall below certain levels, then many investors will find their developments no longer viable".
Analysts say OPEC could be forced to act if oil prices drop much further.
"At some point, OPEC will have to do something if prices fall below $100," said Carsten Fritsch, senior oil analyst at Germany's Commerzbank. "OPEC would either have to cut output, or at least, not increase production as they have been planning."
Investors also kept a wary eye on escalating tensions on the Korean peninsula and a standoff between Iran and the West over Tehran's disputed nuclear programme.
World powers met on Friday in the Kazakh city of Almaty to urge Iran to accept their offer to ease some economic sanctions if it ceases its most sensitive nuclear work.
Although there is little chance of a breakthrough, the six powers, the United States, Russia, China, France, Britain and Germany, will be mindful of Israel's impatience with the current diplomatic efforts.
Investors are worried about risks from North Korea since it decided to ban entry to workers from the South to their joint industrial complex, and Washington made military moves and remarks showing that it takes Pyongyang's threats to attack the United States seriously.