Brent crude oil fell today, as fears intensified about the future of Spain's banks, while China signalled it was not planning a large stimulus package, dimming demand prospects.
Oil recovered some losses after the European Commission called for sweeping reforms to restore investor confidence.
However, the move failed to turn around the negative tone of the market.
Spain will soon issue new bonds to fund its ailing banks and indebted regions, even while its borrowing costs neared the unsustainable 7 percent level, which forced other euro zone countries to seek international aid.
Feeding fears that China, the engine of global growth, will not grow as fast has hoped, influential academics said Beijing should shun aggressive fiscal stimulus, in remarks published in leading state-backed newspapers on Wednesday.
They joined a chorus of commentary countering market expectations that China might unveil a stimulus package similar to the 4 trillion yuan ($630.1 billion) in spending unleashed during the global financial crisis.
Brent crude slid $2.34 to $104.35 per barrel by 1330 GMT. It reached its lowest since December, and was down around 12.6 percent so far in May, its biggest such fall in two years.
U.S. crude was down $1.91 at $88.85 per barrel. For the month, the U.S. benchmark has fallen even faster, weighed by a surge in domestic stockpiles. It has fallen 15.3 percent, its biggest fall since late 2008. (C ) Reuters