Crude futures fell Thursday to fresh seven-month lows as data showing a weaker U.S. economy and rising domestic oil stockpiles added to worries about the euro zone.
Light, sweet crude for July delivery settled $1.29, or 1.5%, lower at $86.53 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange settled $1.60 lower at $101.87 a barrel.
Oil prices fell 17% in May, the largest monthly decline since December 2008, on string of disappointing data in the U.S. First-quarter gross domestic product growth was revised to 1.9% from 2.2%, while weekly jobless claims rose, further indications of a slowdown in the world's largest oil consumer.
A weaker economy is translating into falling fuel demand, with data Thursday from the Energy Department showing U.S. oil stockpiles rose 2.2 million barrels last week, above analysts' estimate of a 200,000-barrel build. Stocks now stand at their highest level in 22 years.
"People aren't buying, people aren't shipping, manufacturing is still slow and that's where the consumption comes from," said Rich Ilczyszyn, a broker at iiTrader in Chicago. "We could fall another ten bucks."
Oil prices have fallen by more than 20% since their peak above $110 a barrel in mid-February, stung by renewed worries about Europe's debt crisis and decreasing tensions between Iran and the West. More recently, economic weakness in the U.S. and slower growth in China have added to concerns of falling oil use.
"The biggest fear is a slowing economy," said Andy Lipow, president of trading adviser Lipow Oil Associates. "We could continue to fall."
A slump in the U.S. would lower demand in tandem with a deteriorating situation in the euro zone. The oil market has tumbled in recent days along with stock markets and the euro, as traders worry that Spain's troubled banks could create further problems for the European Union and the euro.
Crude prices fell more than 3% Wednesday amid a broad selloff of stocks and the euro.
Front-month June reformulated gasoline blendstock, or RBOB, settled 3.32 cents lower at $2.8250 a gallon. June heating oil settled 3.36 cents lower at $2.7062 a gallon.