Oil slipped more than $2 to end below $94 per barrel on Thursday, as concerns about a wider economic slowdown raised the possibility of weakening energy demand.
U.S. light, sweet crude slipped $1.96 per barrel, or 2.0%, to end Nymex trade at $93.71 -- off lows of $93.30, but adding to losses of 66 cents a day earlier.
London Brent crude traded lower.
Fears the U.S. economy could slip into a recession have grown over the past several weeks, which could potentially hit demand for oil from the world's top consumer.
On Thursday signs of a slowdown emerged in the Euro zone as well, as data showed industry suffered a setback in November with French and Spanish production mirroring a decline already seen in German industrial production.
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"Fears over weakening oil demand seem to be outweighing concerns over supply," MF Global analysts said in a note.
"Fed officials are expressing deep concern over the economy so the outlook for oil demand this year has certainly dimmed. These worries are clearly trumping any bullish elements in the market calculus," the note added.
Oil fell on Wednesday after a rise in fuel stockpiles in the United States offset a steep decline in crude supplies.
Supplies of gasoline in the United States jumped 5.3 million barrels and distillates rose 1.5 million barrels last week, far exceeding analyst expectations.
Muting the bearish impact of the data, the U.S. Energy Information Administration said crude inventories tumbled 6.8 million barrels to the lowest level since October 2004.
Analysts said the weekly stocks data showed a build in stockpiles of diesel, mainly used by the U.S. trucking and transport sector, which could be a forewarning about the wider economy.
"One week does not make a trend, but if diesel demand in the U.S. starts to weaken, that to me is a warning for the economy as well," said Mike Wittner, global head of oil research at SG.
Oil is below last week's lifetime high of $100.09 a barrel, pressured partly by concerns that a U.S. economic slowdown will erode energy demand.
Investment bank Goldman Sachs said on Wednesday it expected the world's biggest economy to tip into recession this year.
Former U.S. Treasury Secretary Larry Summers added his voice to the chorus predicting a recession on Thursday, saying the chance of a U.S. recession was more than 50 percent.
"I believe to an abnormal extent that the U.S. and global economies are at an inflexion point, with higher risk of recession than ever before this century," he told an investor conference in Oslo.
"That the U.S. economy will stall and fall into recession, seems to be the most likely case," said Summers, who was Treasury Secretary in 1999-2001 in the Clinton administration.
The Organization of the Petroleum Exporting Countries, which supplies more than a third of the world's oil, is keeping a close watch on the economy.
OPEC President Chakib Khelil said on Thursday he expected demand and prices to be affected if the malaise reached global proportions.
"We are closely following with interest the evolution of this crisis which could, if it comes to affect Europe and the rest of the world, bring about a decline in the development of the world economy," Khelil said.