NEW YORK (CNNMoney) -- Oil prices plunged more than 8% Thursday as weak economic data and a strengthening dollar drove crude to its biggest one-day drop since April 2009.
The main U.S. oil contract for June delivery settled down $9.44, or 8.6%, to $99.80 a barrel. That's its lowest level since mid-March and marks its biggest one-day percentage drop in two years. Brent crude, the European benchmark, fell $10.73 to $110.46 a barrel.
The broad underlying fear is that the U.S. economy is slowing down, and traders have a slew of data to back that theory.
On Thursday, a government report showed the number of people filing first-time unemployment claims surged to 474,000 in the latest week -- its highest total in 8 months. That means less demand for oil products because if you don't have a job, chances are you're trying conserve on gas and other energy costs.
In fact, a government report released Wednesday indicated Americans are consuming less gasoline due to sky-high prices.
Adding to the selling pressure was a strengthening U.S. dollar. The greenback gained 1.5% against the euro after the European Central Bank president Jean-Claude Trichet left Europe's interest rates alone and said they weren't likely to change in the near term, despite inflationary pressures.
That sent the dollar soaring and a stronger dollar tends to drive down crude prices because oil and other commodities are priced in the U.S. currency.
"It's like the commodity bubble burst," Daniel Flynn, an energy trader at PFG Best said. "We knew it was going to happen, but didn't know it would be this fast and furious."
The drop has been dramatic. Crude opened the week at $113.89 a barrel, and has declined in each trading session, for an aggregate loss of around 10% in just four days.
"This entire week has been absolutely crazy," Flynn said.
And it's not over yet. On Friday, the government will release its monthly report on jobs. A weak number there has the potential to drive prices down even further.
The drop hasn't translated into lower gasoline prices though. The national average price for a gallon of gasoline rose for the forty-fourth straight day to $3.985 on Thursday, according to motorist group AAA.
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||3.82%||3.84%|
|15 yr fixed||2.96%||2.94%|
|30 yr refi||3.82%||3.85%|
|15 yr refi||3.02%||3.02%|
Today's featured rates:
Shake Shack is a huge success in New York. But will the 'fine casual' burger and fries joint be a big hit with investors too? It looks like Wall Street has worked up its appetite for the Shake Shack IPO. More
On demand delivery startup WunWun is expecting its order volume to double by the time they close up shop on Monday. All thanks to a blizzard. More
The IRS said it has carried out thousands of audits of offshore schemes and pursued criminal charges that have resulted in "billions of dollars in criminal fines and restitutions." And it won't stop there. More