Oil prices fell for a second day on Thursday toward $82 a barrel after a jump in U.S. jobless claims and rising oil product inventories stoked doubts about the pace of fuel demand recovery in the top consumer.
U.S. stockpiles of gasoline and distillate fuels extended a series of builds in July, adding to the supply overhang despite the peak summer travel season which typically boosts demand for transport fuels like gasoline and jet fuel.
Prices extended losses after new U.S. claims for unemployment benefits unexpectedly rose last week, underscoring a weak labor market and the fragile economic recovery.
By 1246 GMT (8:46 a.m. EDT), U.S. crude for September fell 46 cents to $82.01 a barrel.
Prices rebounded from an intraday low of $81.67 a barrel on the back of a weaker dollar -- making oil more affordable for buyers using other currencies.
ICE Brent was down 62 cents at $81.58 a barrel by the same time.
Energy Information Administration data showed distillate stocks rose 2.17 million barrels and gasoline inventories jumped 729,000 barrels, offsetting the potentially bullish impact of a near 3 million-barrel drop in crude stocks.
The statistics that we got were pretty weak as the drop in crude was due to the impact of Bonnie and not an increase in demand, said oil analyst Christophe Barret at Credit Agricole CIB, referring to the precautionary shutdown of oil production in the U.S. Gulf due to the tropical storm last month.
When you look at what happened on distillates and gasoline it's not very bright with demand near to recession levels, said Barret, adding demand was likely to weaken further in the third quarter.
U.S. stock index futures extended losses on Thursday and this also weighed on oil prices in a further sign of the close correlation between oil and equities. .N
BREAK ABOVE $80
Oil prices on Monday ended range-bound trade by breaching the key psychological barrier of $80 a barrel and have since risen to a three-month high of near $83 a barrel.
Iran President Mahmoud Ahmadinejad was unharmed after a homemade explosive went off near his motorcade during his visit to the western city of Hamadan on Wednesday.
Another supportive factor is the potential for further supply disruptions in the Gulf of Mexico after the Colorado State University maintained its forecast for 10 hurricanes, five of them expected to be major.
While some say the return of a geopolitical premium in the oil price is partly responsible for the rally, many analysts think prices have run ahead of oil market fundamentals.
They expect future direction to mainly be determined by macroeconomic factors which should give a better indication of the demand picture in the United States.
Monthly data showed companies hired more workers in July but the gains were too slow to cut unemployment and spur the economy significantly, reports showed on Wednesday.
(Additional reporting by Alejandro Barbajosa in Singapore; editing by Sue Thomas)