Oil prices deepen fall as eyes on U.S. economy

By Luke Pachymuthu

SINGAPORE (Reuters) - Oil prices deepened their plunge on Thursday, on fears global energy consumption could contract if the United States slipped into a recession.

U.S. crude for May fell $1.43 to $101.11 a barrel at 8:16 a.m. British time, about $10.00 off the record $111.80 hit on Monday. The April contract, which expired on Wednesday, had plummeted almost $5 the previous day.

London Brent crude fell $1.27 $99.45.

Oil prices have risen 6 percent since the start of the year. But investors nervous about the economy are cashing in on recent record prices in commodity and energy, giving these markets another beating in Asia on Thursday and shifting money to safe-haven U.S. government bonds.

"I suspect that it was a reassessment and a rationalisation of ongoing concerns over the U.S. economy that's triggered some selling," said David Moore, an analyst at Commonwealth Bank of Australia in Sydney.

The heavy losses came during a week which saw equity and commodity markets swing wildly as traders balanced out aggressive interest rate cuts by the U.S. Federal Reserve against signs of a recession in the world's largest energy consumer.

U.S. demand for gasoline over the past four weeks was 0.1 percent below last year, while demand for distillate fuels such as diesel, jet fuel and heating oil fell by about 5.4 percent, data from the U.S. Energy Information Administration showed on Wednesday.

U.S. distillate inventories dipped to their lowest level since June 2005 while gasoline stocks eased below their 15-year high, the EIA said. Crude inventories rose a modest 200,000 barrels, leaving them 3.7 percent below last year.