* Weak U.S., Europe jobs and factory data prompt caution
* U.S. crude stocks at highest since September 1990
* Coming Up: ECB rate decision; 1145 GMT; expect unchanged
* Coming Up: US jobless data 1230 GMT
(Changes dateline, updates throughout)
By Jessica Donati
LONDON, May 3 Oil prices fell again on Thursday,
slipping below $118 a barrel after steep losses a day earlier
were triggered by a round of poor employment and manufacturing
data either side of the Atlantic, reviving fears about the
A build in U.S. crude oil stocks also contributed to a slide
in prices the previous day, after inventories were reported at
the highest level since September 1990.
"Everything is dependent on macroeconomic issues. Personally
I am, one way or another, even with the fundamental
difficulty in identifying all the geopolitical issues like
Iran," said Tony Machacek, an oil futures broker at Jefferies
"If these remain on the side, I think prices could easily be
Brent crude was down 55 cents to $117.65 a barrel at
0916 GMT, after falling more than 1 percent in the prior
session. The contract is well below the year's high of $128.40
reached on March 1.
U.S. oil was down 50 cents at $104.72 a barrel, after
dropping nearly 1 percent on Wednesday. A steeper fall in Brent
narrowed its premium versus U.S. oil CL-LCO1=R to as low as
$12.65 on Thursday, the smallest since Feb. 1.
"The market is waiting for jobless claims later today for
momentum one way or another," Machacek continued.
U.S. weekly jobless claims data was due at 1230 GMT on
Thursday, followed by U.S. employment data for April at 1230 GMT
Analysts have forecast a slight rise in hiring has been
forecast, leaving unemployment at a three year
Oil slid the most in two weeks on Wednesday after data
showed U.S. private firm hiring in April was at the slowest
since September, while unemployment in the euro zone was at a 15
year record high.
On the manufacturing front, new orders for U.S. factory
goods suffered the steepest drop in three years, while in the
euro zone's manufacturing sector index was at its lowest since
Adding to the gloomy outlook for the world economy, China's
services sector data showed that growth slowed last month, with
the non-Manufacturing Purchasing Managers' Index (PMI)
retreating from March's ten-month high.
Also helping to chip away at oil prices, worries about an
escalating conflict between the West and Iran over its nuclear
programme are beginning to subside as the parties involved have
been engaged in productive talks.
Iran on Wednesday said it would seek an end to sanctions
over its nuclear activities at talks with big powers later this
However, Iran also accused France of helping Israel develop
inhumane weapons and hardened a public line that an end to
sanctions is vital to the success of the talks. It was the first
time an influential political figure explicitly said he expects
progress on the issue.
"Iran is still a factor. There is risk premium built into
forward pricing. At the end of the day, people can never really
become comfortable about these things until they see concrete
actions," said Ric Spooner, chief market analyst at CMC Markets.
Iranian oil exports are running at between 200,000 and
300,000 barrels per day below last year's level, the head of the
International Energy Agency said on Thursday.
Iranian officials have said the country exported an average
of 2.2 million barrels a day last year.
(Additional reporting by Manolo Serapio Jr.; editing by Himani
Sarkar and Keiron Henderson)