Oil Dips Under $50 on Recession Fears

That is also the highest level of claims since July 1992, the department said, when the U.S. economy was coming out of a recession.

Concerns that Congress may not approve a $25 billion rescue package for ailing U.S. carmakers General Motors (GM Quote), Ford (F Quote) and Chrysler helped drag the Dow Jones Industrial Average down 5.1% Wednesday to its lowest level since March 2003.

"The downturn in equities is driving an overall lack of confidence," said Olivier Jakob of Petromatrix in Switzerland.

Stocks slid sharply Thursday in Asia and Europe. Japan's benchmark Nikkei index fell 6.9% and Hong Kong's Hang Seng index was off 4%. London's FTSE index was down 2.5%, Germany's DAX index lost 2.8% and France's CAC-40 shed 3.5%.

"The stock markets are representing investor pessimism regarding the economic outlook and what we have in store over the next year," analyst Hassall said.

On Wednesday, the U.S. Department of Transportation provided more evidence that the slowdown continues to hurt gasoline consumption, even as prices fall. Americans drove almost 11 billion fewer miles in September, the department said.

A production cut by OPEC may keep prices from falling further. The Organization of Petroleum Exporting Countries is holding an informal meeting later this month ahead of an official meeting in December. OPEC President Chakib Khelil has signaled the group may announce production cuts at the December meeting, but some members, such as Iran, have called for earlier cuts.

"It's gonna take a pretty big supply side response from OPEC at their next meeting to provide some support," Hassall said. "The focus of the market is definitely on the demand side."