NEW YORK (CNN/Money) - Oil prices tumbled for a second straight day Thursday as traders bet on lower demand from economic powerhouse China on the heels of an unexpectedly large rise in U.S. crude inventories.

U.S. light crude for December delivery sank $1.54 to close at $50.92 a barrel on the New York Mercantile Exchange, the lowest in two weeks, after sinking $2.71 Wednesday. The December contract has fallen about 8 percent over the last two sessions.

In London, Brent crude slid $1.06 to $48.39 a barrel.

U.S. light crude reached a record trading high of $55.67 a barrel Monday.

Traders shifted their focus from concerns about a shortage in heating oil supplies to the build in crude inventories as prices began to slide Wednesday.

A government report released Wednesday showed a bigger-than-expected increase of 4 million barrels in weekly inventories, narrowing the supply deficit against last year to 9 million barrels.

"The crude stock build exceeded expectations and that was an excuse for some guys to take money off the table," David Thurtell of Commonwealth Bank of Australia in Sydney told Reuters.

There were also signs that hedge funds, whose managers have become more active in energy markets this year, were moving funds out of oil into stocks and the dollar, both of which rallied.

"We're seeing some fund realignment at the moment," an oil trader with a major bank in Singapore told Reuters.

Meanwhile, the reports showed heating oil stocks fell 600,000 barrels to 48.9 million, some 15 percent below last year.

Oil is still up 60 percent this year and nearly $10 over the past two months, driven by strong demand growth that has pushed global production to its limit and fueled fears that refiners have not made enough heating oil to last the winter.

But global demand may be set to slow after the Chinese central bank lifted interest rates for the first time in nine years in an effort to cool its red hot economy, Mueller noted.  

--from staff and wire reports