Crude oil plunged below $35 a barrel on Thursday after OPEC said demand for its crude will drop and reports in the U.S. showed employment claims increased.

As the economic crisis drives worldwide economies to cut fuel use, the Organization of Petroleum Exporting Countries said consumption from members of its supplies will decline 4.2 percent or 1.4 million barrels to 29.5 million barrels a day, an OPEC monthly report said today.

Separately, the U.S. Labor Department reported first-time requests for unemployment insurance climbed to 524,000 in the week ending Jan. 10, surpassing analyst's forecasts.

Crude oil futures for February fell $2.86 or 7.67 percent to $34.42 a barrel at the New York Mercantile Exchange Thursday by 12:09 p.m. Oil prices hit a low of $33.94 today.

Brent crude oil for the same month declined 99 cents or 2 percent to $44.18 a barrel on London's ICE Futures Europe Exchange today.

OPEC also slashed its forecast for global demand of crude to decline180,000 barrels per day in 2009.