Oil prices retreat on downbeat job data

Oil prices fell Thursday as a government data showed that more-than-expected Americans applied for unemployment benefits last week.

The number of Americans who initially applied for jobless benefits in the week ending May 17 increased 28,000 to a seasonally adjusted 326,000, said the Labor Department before the opening bell. The increase was well beyond analysts' expectations.

Traders took profits from the previous day's gains. Oil prices soared Wednesday as U.S. crude inventories unexpectedly dropped last week.

Crude stockpiles decreased 7.2 million barrels to 391.3 million in the week ending May 16, said the Energy Information Administration (EIA) Wednesday. Stockpiles at Cushing, Oklahoma, the delivery point for WTI, fell by 225,000 barrels to 23.2 million, the least number since December 2008.

Other economic data came in optimistic, which limit the decline of crude prices. Operating conditions in the U.S. manufacturing sector continued to improve in May, with strong rises in production and output complemented by further payroll growth, said data firm Markit Thursday. The Markit Flash U.S. Manufacturing Purchasing Managers' Index improved to 56.2 in May, up from April' s 55.4, said Markit.

Light, sweet crude for July delivery moved down 33 cents to settle at 103.74 U.S. dollars a barrel on the New York Mercantile Exchange, while Brent crude for July delivery lost 19 cents to close at 110.36 dollars a barrel.