Brent drops to 27-month low on supply glut; U.S. oil rebounds

NEW YORK (Reuters) - Brent oil fell for the third straight session on Thursday to its lowest level since June 2012, continuing a three-month rout as a global supply glut and concerns about demand persisted, while U.S. oil inched higher.

After steep losses early, U.S. crude rebounded after government data showed an unexpected decrease in unemployment claims over the past week. Monthly employment data due on Friday is expected expect to show growth in the labour force. U.S. stocks also rebounded sharply in afternoon trading to end near unchanged.

But overall the sentiment remained bearish as supply from key producing regions including the United States and Middle East remained strong and economic data from Europe and Asia hinted at weak demand, a scenario that has seen prices tumble since June.

Sharp cuts in Saudi Arabia's oil sale price to Asian customers on Wednesday came as the clearest sign yet that the world's largest exporter is trying to compete for crude market share, which pushed prices sharply lower overnight.

Brent crude for November delivery fell 74 cents to settle at $93.42. It earlier sank to $91.55, its lowest since June 2012.

U.S. November crude rose 28 cents to settle at $91.01 per barrel, after earlier sinking to $88.18, its lowest intraday level since April 2013.

Brent's premium over U.S. crude was around $2.40 on Thursday, its lowest since August 2013.

"The snap back in U.S. prices suggests that we are getting close to a bottom," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut. "Whether we see more lows will be the real question."

Oil declined early alongside European stocks as the European Central Bank left interest rates unchanged on Thursday, as expected. ECB President Mario Draghi said that a planned bond purchase programme would last at least two years.

Some analysts said a cut in production from the Organization of the Petroleum Exporting Countries (OPEC) at its meeting next month was the only move that could enable a price recovery.

With such steep losses in oil prices since June, others said that oil prices were likely to move higher.

"I don't think we have much potential to keep going lower," said Carl Larry, head of consultancy Oil Outlooks. "We are at the bottom of the range and there is a lot of room to go up."

Oil production in Russia increased by almost 0.9 percent month-on-month in September to 10.61 million barrels per day (bpd), Energy Ministry data showed.

(Reporting by Edward McAllister in New York, Libby George and Sam Wilkin in London and Manolo Serapio Jr. in Singapore; Editing by Marguerita Choy)