Brent crude oil hit an 18-month low of $91 per barrel on Thursday as the outlook for economic growth darkened, pointing to lower-than-expected energy consumption worldwide.

China's factory sector shrank for an eighth straight month in June as export order sentiment hit its weakest since early 2009, according to a survey indicating the country's economic trough may extend well into the third quarter.

The U.S. Federal Reserve on Wednesday signalled a weaker outlook and disappointed some investors who had hoped for aggressive steps to boost the world's top economy.

Demand also looks shaky in the eurozone where borrowing costs are rising and Spanish debt yields are expected to hit new highs at auction.

Spain will later shed light on the state of its banks and possibly make a formal request for rescue funds.

Brent crude oil futures for August fell $1.69 to a low of $91.00 per barrel, its weakest since December 2010, before recovering slightly to trade around $91.50 by 0855 GMT.

Front-month U.S. crude was down $1.00 at $80.45 per barrel, after earlier hitting an eight-month low of $79.92.

"It is a toxic combination of negative factors," said Eugen Weinberg, head of commodities research at Commerzbank.

"Disappointment over the economic situation, the euro zone crisis, high risk aversion and strong downward momentum all mean investors are staying away from oil."

'ALL VERY BEARISH'

On top of the negative macro-economic news, oil was also hit by news on Wednesday of an unexpected rise in U.S. crude inventories, which increased 2.86 million barrels, defying forecasts for a 1.1 million barrel decline, according to data from the U.S. Energy Information Administration.

Brent has so far fallen 10 per cent this month and is now down almost 15 per cent in 2012, despite a strong rally through the first two months of the year. It has slipped almost 30 per cent from this year's peak above $128 in March.

The U.S. Federal Reserve on Wednesday extended until year-end its current programme of selling short-term bonds and buying longer-dated ones to bring down borrowing costs, instead of launching a third round of outright bond purchases.

While Fed chairman Ben Bernanke said the U.S. central bank was ready to do more to help a fragile recovery, many investors hoping for a third round of quantitative easing which would have boosted investment flows into riskier assets, like oil, were disappointed.

"In addition to the technical weakness of the market, the weak FOMC action has put more downside pressure on prices," said Ken Hasegawa a commodity sales manager at Newedge.

"The U.S. economy is not in good shape. You add Europe and a poor demand-supply situation, and the picture gets much worse. I can't see any support for crude prices now. It's all very bearish."

China's export orders were seen at the weakest since early 2009, according to the HSBC Flash Purchasing Managers Index, the earliest monthly indicator of China's industrial activity.

"Any indication that the Chinese economy is slowing more than expected will put further pressure on oil prices, and commodities," said Michael Creed, economist at National Australia Bank.