Oil tumbles more than 4%

Oil tumbled more than 4 percent on Thursday after alarmingly weak Chinese industrial data and a bleak economic outlook from the U.S. Federal Reserve triggered the biggest commodity sell-off since May.

Brent and US crude futures both dropped below the range held for most of the past month, in heavy trading that extended losses from the previous session after the US central bank warned the world's top economy faced significant downside risks.

Data showing private sector business activity in Europe and China, one of the most important sources of growth in commodity demand, declined sharply this month added to worries.

Stocks dropped 4 percent and the Reuters-Jefferies CRB index .CRB, a 19-commodity global benchmark for the asset class, plunged 4.4 percent in the biggest rout since May 5, as investors headed into safer havens such as the dollar and US government bonds.

"We're just not seeing any real signs of life out there economically. Traders are heading to higher ground," said Rob Kurzatkowski, futures analyst with OptionsXpress.

"There is just a lot of doom and gloom out there in the markets."

Brent crude lost $4.87 to settle at $105.49 a barrel, after dropping to $105.02 earlier, the lowest level since August 11.

US crude was harder hit, settling down $5.41 at $80.51. It was the biggest one-day drop in prices since August 8, with prices touching $79.66 a barrel during intraday activity.

Heating oil's premium to RBOB gasoline futures hit the highest level since January 2009, as weak demand in the United States dragged the gasoline contract down 4 percent.