Global oil prices fell more than $2 a barrel Thursday as traders worried over poor economic data, a potential end to US stimulus measures and signs of weaker-than-expected US crude demand.
A barrel of West Texas Intermediate crude for delivery in April dropped $2.38 to $92.84.
European benchmark Brent oil slid $2.07 to $113.53 a barrel.
It was the second day in a row in which crude prices fell sharply. Analysts said there was a general sense that the oil market has become too buoyant given the brittle state of the economy.
"The market had some vertigo at these high levels, and the market is now correcting," said Andy Lebow, senior vice president for energy futures at Jefferies Bache.
Fresh economic data suggested weaker economic conditions that could result in lower demand for petroleum. The US Labor Department said initial jobless claims rose to 362,000 in the week ending February 16, more than the analyst estimate of 358,000.
Meanwhile, a Markit report on the eurozone business activity showed its purchasing managers index hit a two-month low at 47.3 in February, down from 48.6 the previous month.
Lebow said the oil market was also watching the Federal Reserve for any potential shift in policy. Minutes released Wednesday by the Federal Reserve's Open Market Committee showed a vigorous debate on whether to continue a bond-buying program that many analysts believe has supported higher oil prices.
The US government's Department of Energy (DoE) Thursday announced that American crude inventories rose by 4.1 million barrels in the week ending February 15.
That was more than double market expectations for a gain of 1.7 million barrels, according to analysts polled by Dow Jones Newswires.