Oil prices sank under 67 dollars on Thursday after weak jobs data quashed hopes of a speedy economic recovery in the United States, which is the world's top energy consumer.
In late afternoon trade here, Brent North Sea crude for delivery in August dropped 2.17 dollars to 66.62 dollars a barrel, having earlier hit 66.33.
New York's main contract, light sweet crude for August delivery fell 2.47 dollars to 66.84 dollars per barrel, after earlier touching 66.54.
US job losses surged to 467 000 in June, pushing the unemployment rate to a new 26-year high of 9.5 percent, according to data Thursday that dampened hopes for an early recovery from recession.
"The doomsayers were right and today's US non farm payrolls did indeed show that unemployment is continuing to increase apace across the Atlantic despite other suggestions that the green shoots of recovery should now be pushing through," said analyst David Fineberg at spread-betting firm CMC Markets.
The Labor Department report, seen as one of the best indicators of economic momentum, reversed the improvement seen last month when job losses fell to a revised 322,000.
Analysts had expected a smaller June number of 365 000 job losses, but a higher unemployment rate of 9.6 percent. The jobless rate in May was 9.4 percent.
The dollar meanwhile rose against the euro and yen as traders returned to the safe-haven currency after worse-than-expected US job losses and a eurozone decision to keep interest rates stable.
A stronger greenback makes dollar-priced oil more expensive for buyers armed with weaker currencies. In turn, this tends to dampen demand and pull the crude market lower.
Oil also traded in negative territory on Thursday after falling a day earlier on data revealing a drop in US inventories of petroleum products.
The US Department of Energy said in its weekly report that American crude oil reserves tumbled 3.7 million barrels in the week ending June 26, the fourth weekly drop in a row.
But the department also reported growing domestic inventories of key refined products gasoline and distillates.
Gasoline or petrol stocks rose 2.3 million barrels, and distillates, which include diesel and heating duel, increased by 2.9 million barrels last week.
Prices had dropped on Tuesday from eight-month peaks above 73 dollars after new data showed a plunge in American consumer confidence.
The market remains concerned by tensions in key crude producer Nigeria.
Nigerian rebels on Monday announced a new raid against a Shell oil facility and said they had killed at least 20 soldiers in a gun battle, a claim denied by the security forces.
The Niger Delta has since 2006 been rocked by violence by armed groups who say they are fighting for a greater share of the region's oil wealth for the local population.
