Crude oil futures dropped on Thursday by more than 1 percent, ending May with their biggest monthly decline in more than three years as bloated U.S. stockpiles and weak economic data added to worries about the euro zone crisis, all dampening oil demand prospects.
Oil pared sharp losses of more than 2 percent in afternoon trading, after Dow Jones reported that the International Monetary Fund was considering a rescue loan to beleaguered Spain if it failed to bail out a big bank.
But an IMF spokesman later said the fund was not in talks with Spain about a possible financial report, though an IMF mission was going to Madrid next week for scheduled econonic consultations.
"The latest series of U.S. data has snuffed out recent silver linings that had kept growth moving, though at a slow pace, and Europe is imploding," said Mark Anderle, trader at TAC Energy in Dallas.
"Technical support has also vanished, so now you have a perfect cocktail for selling," he added.
Crude futures slumped to seven-month intraday lows after official data showed that U.S. crude oil stockpiles swelled last week, hitting the highest level in nearly 22 years.
Oil prices trudged downwards earlier on disappointing U.S. economic reports that worsened the outlook for global oil demand prospects, already dampened by the worsening euro zone crisis, and slower growth in China and India.
U.S. crude oil inventories, excluding strategic reserves, rose much more than expected last week to hit their highest level since July 1990, U.S. Energy Information Administration (EIA) date showed. That quickened the day's selling.
The euro sank in volatile trading against the dollar, touching a 23-year low against the greenback on concerns about Spain's banking troubles and weak U.S. economic data. In turn, investors pared their holdings in riskier commodities and equities assets.
In London, ICE Brent crude futures for July delivery settled at $101.87, down $1.60, the lowest finish for front-month Brent since Oct. 4.
Front-month Brent fell 14.7 percent for the month, its biggest monthly decline since December 2008, after slipping 3 percent on Wednesday. Brent has fallen more than 21 percent from its 2012 high of $128.40 hit in March.
U.S. crude for July delivery settled at $86.53, falling $1.29, and marking the lowest U.S. front-month close since Oct. 20.
Front-month U.S. crude sustained a 17.5 percent loss for May, its biggest monthly decline since December 2008. It has dropped more than 22 percent from its 2012 peak of $110.55 struck in March.