Oil drops under $92 to 27-month low as supply glut grows

By Libby George and Sam Wilkin

LONDON (Reuters) - Oil prices fell for the third straight session on Thursday, with Brent hitting its lowest level since June 2012, continuing a three-month long rout as a global supply glut and concerns about demand persisted.

For U.S. crude, some support was found from government data that showed an unexpected decrease in unemployment claims over the past week. Monthly employment data is due on Friday which economists expect to show an increase in the size of the labour force. (Full Story)

But overall the sentiment remained bearish as supply from key producing regions including the United States and Middle East remained strong while economic data from Europe and Asia hinted at weak demand.

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 and keep the market well supplied.

"This is a structural change in the oil market, with Saudi Arabia explicitly stating that they are willing to compete on price," said Bjarne Schieldrop, chief commodities analyst at SEB in Oslo. "I think Brent will fall below $88 before we see the bottom of the market."

Brent crude for November delivery LCOc1 fell $1.76 to $92.40 by 11:54 a.m. EDT (1554 GMT). It earlier hit $91.55, its lowest since June 2012.

U.S. November crude CLc1 lost 71 cents to reach $90.02 per barrel, after earlier sinking to $88.18, it lowest intraday level since April 2013.

Brent's premium over U.S. crude CL-LCO1=R was at about $2.40 on Thursday, its lowest since August 2013.

Oil declined 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. U.S. stocks also fell.

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.

(Additional reporting by Manolo Serapio Jr.; Editing by William Hardy and David Evans)