Oil prices tumbled about 4 percent and dropped below $100 per barrel as investor anxiety over European debt swung from Italy to Spain.

Benchmark crude on Thursday fell $3.95, or 3.9 percent, at $98.64 per barrel in New York. Oil crossed the $100 mark for the first time since July on Wednesday.

Europe is struggling with massive government debts and could be headed for recession. Investors are concerned that a wave of bank failures is on the way. That would curtail spending in the eurozone and cut energy demand.

While new leadership in Greece and Italy work to deal with the crisis, the focus is now on Spain, where interest rates on bonds have soared to the highest point since 1997. The government has to dangle those high rates to get investors to buy bonds that could be very risky. Italian and French bond yields also are rising.

The economic news was more encouraging in the U.S. The government said the number of people seeking unemployment benefits fell last week to the lowest level since April, suggesting that layoffs are easing.

Gasoline prices slipped another penny to $3.39 per gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular has lost 59 cents since its 2011 peak near $4 per gallon in May. It's still 50 cents higher than the same time last year.

In other energy trading, natural gas prices rose 4 cents to $3.390 per 1,000 cubic feet, after the Energy Information Administration reported that U.S. stockpiles grew less than expected last week. Heating oil fell 3 cents to $3.0997 per gallon and gasoline futures fell 11 cents to $2.5223 per gallon.

Brent crude, which is used to price oil produced in foreign countries, fell $3.39, or 3 percent, to $108.13 a barrel in London.