Crude prices were under pressure throughout the session, with additional bearish sentiment after China tightened credit even as factory activity in the world's No. 2 oil consumer hit a nine-month low.

Gold hit a 2-1/2 year low as commodities suffered the biggest sell-off in a year and a half, and the S&P 500 fell more than 2 percent on Thursday as markets feared the slowing of the monetary stimulus that has bolstered markets following comments from Fed Chairman Ben Bernanke on Wednesday.

Against a background of ample physical oil supplies, analysts said there was little immediate support for crude to stem the slide.

"You simply do not have the physical tightness to limit the downside during periods when investors are running away," said Tim Evans, energy specialist at Citi Future Perspectives.

"The oil market had some support from a falling U.S. dollar and a buoyant equity market that had made it seem as though economic growth would sustain, if not increase, demand for petroleum, but that scenario ended at about 2:45 yesterday afternoon," he said, referring to the time of Bernanke's speech.

Brent crude settled down $3.97, or 3.74 percent, to $102.15 per barrel. Losses escalated in post settlement activity to nearly 4 percent as the stock market continued to fall.

U.S. crude oil for July, which expired on Thursday, fell $2.84 to settle at $95.40, the largest daily decline since November. The more heavily traded August contract also posted heavy losses, settling down $3.34 at $95.14 a barrel.

On the technical charts, Brent broke through the 14-, 20- and 50-day moving averages. U.S. crude oil futures went through the 14- and 20-day moving averages.

Brent's premium to U.S. crude touched $6.89 a barrel at one point, the lowest level since Nov. 2011.

Oil was already under pressure on Wednesday, when Bernanke said the U.S. economy was expanding strongly enough for the central bank to begin slowing the pace of its bond-buying stimulus later this year.

Prices also took a hit from a surprise increase in U.S. crude inventories during the summer driving season when demand for gasoline generally rises. Crude stocks rose by over 300,000 barrels, surprising analysts who had expected a 500,000 barrel drop.