US crude futures fell for a third day today, to below $76 a barrel, pressured by weak US service sector data and nervousness ahead of non-farm payrolls data later in the day.
Other commodity markets were also shaky - gold slipped back towards $1,200 an ounce after yesterday's record peak, copper fell further from recent 14-month highs, and the dollar ticked up versus a basket of currencies.
Equity markets softened, with Sydney's ASX 200 down 1.5 per cent and Japan's Nikkei fell 0.2 per cent.
NYMEX crude for January delivery fell 57 cents to $75.89 a barrel by 0520 GMT, after settling down 14 cents at $76.46 yesterday.
Brent crude dipped 51 cents to $77.85.
Crude prices tumbled on Wednesday after the release of US inventory data, which showed crude and gasoline inventories jumped last week as the weak economy continued to batter demand in the world's top consumer.
The losses put US crude on track for a 0.25 per cent fall this week, but Brent is headed for a 0.8 per cent rise.
"Oil is flooding into Cushing and depressing values for WTI. At this time, Brent is probably more representative of the global physical market," MF Global analyst Edward Meir said.
He added that prices would likely bounce if support at around $75 comes under scrutiny on nervousness ahead of US non-farm payrolls data later today.
"The payrolls data is causing a bit of nervousness and people are backing away. Expectations are for a 120,000 decline but we might see a slightly bigger decline."
The White House said yesterday a private-sector payroll report had signalled that November's unemployment level may tick up from 10.2 per cent in October, but stressed it was not predicting the outcome of the government's monthly payroll data.
Analysts polled by Reuters expected the unemployment rate to be unchanged at 10.2 per cent.
Traders remain concerned about widening spreads between front and second month WTI, which stood at around a $1.80 contango yesterday versus 50 cents in the middle of November. The Brent contango was 86 cents, more or less steady since mid-May.
"There are contangoes across the board, but it's especially steep in NYMEX. This will mean more stored oil," a trader said.
"It costs about a dollar a month roughly to store crude in a tanker. If you can pick up a $1.50 or more contango per barrel, it's the easiest money you'll make - providing you get hold of the ship and the stock."
In the longer term, prices were expected to rise. US investment bank Goldman Sachs saw prices averaging $90 a barrel next year and $110 in 2011, as strong growth in emerging market economies boosts crude demand.
Reuters