Oil futures extended their decline early Thursday, as the government reported that continuing jobless claims hit their highest level since 1982, highlighting the dire state of the U.S. economy.
Crude oil for February delivery fell $1.66, or 4%, to $40.96 a barrel in electronic trading on Globex.
"The less-than-inspiring global macro backdrop cannot be emphasized enough at this stage -- with most of the world either at, or in, recession, the case for a sustainable rally in commodities looks unpersuasive," said Edward Meir, an analyst at MF Global, in a note.
In economic news, first-time applications for state unemployment benefits fell 24,000 to a seasonally adjusted 467,000 in the week ending Jan. 3, the Labor Department said Thursday.
Despite the decline in the most recent weekly data, the level of initial claims is 42% higher than the same period in the prior year. The four-week average of continuing claims rose 45,000 to 4.47 million -- the highest level since December 1982. Read more.
A string of gloomy economic reports in recent months have taken a toll on oil prices, as concerns have escalated that energy demand will decline further.
On Wednesday, oil fell 12% in its biggest one-day percentage drop in more than seven years, after government reports showed U.S. crude inventories jumped last week and as data indicated deteriorating troubles in the economy.
The nation's stockpiles of crude reached 325.4 million barrels in the week ended Jan. 2, up 6.7 million barrels from a week ago, the Energy Information Administration (EIA) reported Wednesday. Analysts surveyed by Platts had expected a buildup of 1.5 million barrels.
The EIA will report the latest data on natural-gas supplies at 10:30 a.m. Eastern on Thursday.
Analysts at IHS Global Insight are projecting a storage withdrawal of 116 billion cubic feet for the week ended Jan. 2.
Also on Globex, February reformulated gasoline was flat at $1.07 a gallon, while February heating oil rose 2 cents to $1.56 a gallon.
February natural-gas futures rose 7 cents to $5.94 per million British thermal units.
