LONDON: Brent crude prices turned negative on Thursday, extending losses for a third day as a healthy reading of US jobs data further dampened the prospect for more monetary stimulus and as the dollar strengthened.
Brent crude oil futures fell 38 cents to $121.96 a barrel by 1340 GMT, slipping from its earlier high of $123.52.
US crude maintained the session's gains supported by the US data. It traded up 35 cents to $101.82. Trading volumes were moderate for both contracts ahead of Easter public holidays in Europe and the United States.
The closely watched report from the US Labor Department showed the number of Americans lining up for new jobless benefits fell to the lowest level in nearly four years last week.
Initial claims for state unemployment benefits fell 6,000 to a seasonally adjusted 357,000, the lowest since April 2008.
"The job report is positive, the market is likely to interpret this as QE3 becoming more elusive, and thus we may witness more corrections across risky assets, including oil," said Harry Tchilinguirian, BNP Paribas' Head of oil market strategy.
The Brent price was hit harder than US crude futures as European shares hit two-month lows.
SUPPLY DISRUPTIONS
Earlier in the day, oil prices were supported by supply disruption fears.
In a move that could seriously complicate Iran's oil exports after a European Union embargo comes into force on July 1, a major Chinese ship insurer will halt indemnity cover for tankers carrying Iranian oil, sources told Reuters.
China is the top buyer of Iranian crude and the insurance move is the first sign Chinese refiners may struggle to obtain the shipping and insurance they need to keep importing from OPEC's second-biggest producer.
Industry sources earlier told Reuters Japanese refiners planned to cut crude imports from Tehran yet again in April as they shy away from renewing annual contracts.
"The situation regarding Iranian crude exports is getting more and more complicated as US and EU sanctions are starting to have an ever bigger impact," said David Wech from JBC Energy.
Adding to supply disruptions worries, explosions had temporarily shut on Thursday both of the pipelines bringing about a quarter of Iraq's crude exports from Kirkuk to the Turkish port of Ceyhan on the Mediterranean.
But exports from Ceyhan continued, using inventories. It was not immediately clear what had caused the blasts but sabotage is common on oil pipelines into Turkey from Iraq, an area where Turkish Kurd separatist militants operate.
Oil was also supported by easing fears of a sharp slowdown in China following a survey which showed that services sector expanded again in March and business confidence hit an 11-month high, though overall activity remained below its long-term average.
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