Oil prices drop on tapering fears

Oil prices continued to fall Thursday as upbeat U.S. job data fueled fears that the Fed may quicken its pace of tapering.

The advance figure for seasonally adjusted initial jobless claims decreased 15,000 to 330,000 last week, the U.S. Labor Department reported Thursday.

A series of encouraging economic data of the United States released recently strengthened the speculation that the Fed may expedite the exit from its massive bond buying programs.

Moreover, the minutes of the Fed's latest policy meeting in December revealed that most Fed officials backed the reduction of the bond-buying program.

The so-called tapering of the U.S. central bank would likely boost the greenback, making dollar-priced oil more expensive for countries using other currencies, dampening the demand for oil.

According to the report from Energy Information Administration (EIA), the statistics arm of the U.S. Department of Energy, gasoline inventories of the United States increased more than expected in the week ending Jan. 3, reaching the highest level since March. The weak demand for fuel put a lot of pressure on the oil market.

Meanwhile, oil prices faced further downward pressure as Libya increased crude output in recent days.

Light, sweet crude for February delivery moved down 67 cents to settle at 91.66 U.S. dollars a barrel on the New York Mercantile Exchange, while Brent crude for February delivery lost 76 cents to close at 106.39 dollars a barrel.