Oil dips under $50, investor confidence sinks

By Chris Baldwin

LONDON (Reuters) - Oil dived under $50 a barrel on Thursday for the first time since May 2005, deepening losses as financial markets reflected ever lower confidence in the world economy and evidence mounted of falling fuel demand.

U.S. crude fell $3.26 to $50.36 a barrel by 1536 GMT after earlier touching a 42-month low of $49.75.

London Brent crude shed $2.82 to $48.90 a barrel.

As economic slowdown has destroyed fuel demand, oil companies plan to store millions of barrels of oil in the hope economics will improve.

The number of U.S. workers filing new claims for jobless benefits rose by a larger than expected 27,000 last week to their highest level in 16 years, Labor Department data showed on Thursday.

"The unemployment data was yet another ugly data point in a seemingly never ending stream of poor economic numbers," said Michael Wittner, global head of oil research at Societe Generale.

"What makes it hard to call a bottom is that even when oil fundamentals firm up, if we're still having these waves of deleveraging it can overwhelm even the oil fundamentals."

Shipping brokers on Thursday said U.S. oil trader Koch and Royal Dutch Shell had booked supertankers capable of storing 10 million barrels of crude, more than top exporter Saudi Arabia produces in a day.