Oil prices extended losses on Thursday after already falling a day earlier on data revealing a drop in petroleum products in the United States, the world's leading energy consumer.

In morning trading here, Brent North Sea crude for delivery in August dropped 86 cents to 67.93 dollars a barrel.

New York's main contract, light sweet crude for August delivery fell 93 cents to 68.38 dollars a barrel.

Oil prices had ended lower on Wednesday following a mixed report on US energy inventories.

The US Department of Energy said in its weekly report that American crude oil reserves tumbled 3.7 million barrels in the week ending June 26, the fourth weekly drop in a row.

But the department also reported growing domestic inventories of key refined products gasoline and distillates.

Gasoline or petrol stocks rose 2.3 million barrels, and distillates, which include diesel and heating duel, increased by 2.9 million barrels last week.

Prices had dropped on Tuesday from eight-month peaks above 73 dollars after new data showed a plunge in American consumer confidence.

Barclays Capital said in a report Wednesday that oil prices cannot be sustained below 70 dollars into the medium term.

The market remains concerned by tensions in key crude producer Nigeria.

Nigerian rebels on Monday announced a new raid against a Shell oil facility and said they had killed at least 20 soldiers in a gun battle, a claim denied by the security forces.

While a Shell spokesman confirmed the raid and said it had caused a loss of production, Nigeria's combined police and army joint task force (JTF) denied there had been any clash with the rebels.

The Niger Delta has since 2006 been rocked by violence by armed groups who say they are fighting for a greater share of the region's oil wealth for the local population.