Oil fell below US$100 a barrel for the first time since February as US employers added fewer workers than forecast, stoking concern that demand won't be enough to reduce inventories from their highest level in 21 years.

Futures declined 3.9 per cent after Labor Department figures showed payrolls rose 115,000, the smallest gain in six months.

An advance of 160,000 was projected. Euro-region services and manufacturing output contracted more than initially estimated last month.

"The oil market remains focused on the economy," said David Greely, at Goldman Sachs.


"The economic news from Europe and the US has been a little disappointing. It looks like the US is growing a little slower than we expected."

Crude oil for June delivery tumbled US$4.05 to US$98.49 a barrel on the New York Mercantile Exchange, the lowest settlement since February 7.

It was the biggest one-day drop since December 14 and capped a 6.1 per cent decline for the week, the most since September.

Brent oil for June settlement fell US$2.90, or 2.5 per cent, to end the session at US$113.18 a barrel on the London-based ICE Futures Europe exchange.

It was the lowest close since February 2.

The jobless rate fell to a three-year low of 8.1 per cent.

The participation rate, which indicates the share of working-age people in the labour force, slipped to 63.6 per cent, the lowest level since December 1981.

"The only reason that the jobless rate went down was that the labour participation rate fell to the lowest level since 1981," said Jason Schenker, president of Prestige Economics, a Texas-based energy consultant.

"This is going to weigh on the crude market and especially on equities."

Elections in France, Greece, Italy and Germany may determine how the region's governments respond to Europe's financial crisis.

"The European situation continues to be a drag on the market," said Tom Bentz, a director with BNP Paribas Prime Brokerage in New York.

"There are elections this weekend that could have a major impact on policy. The US, which had been holding up pretty well, is starting to show cracks."

The Standard & Poor's 500 Index declined 1.6 per cent. The Standard & Poor's GSCI Index of 24 commodities fell 2.4 per cent, led by crude.

US crude stockpiles increased 2.84 million barrels to 375.9 million in the seven days ended April 27, the most since September 1990, according to an Energy Department report.

Domestic output gained 8000 barrels a day to 6.12 million, the highest level since November 1999.

US petrol consumption fell 0.3 per cent to an average 8.66 million barrels a day in the four weeks ended April 27, leaving demand 4.7 per cent lower than a year earlier.