Oil prices dived to fresh seven-month lows Thursday, driven by weak data in the United States and the dollar's rally against the euro amid worries of a possible Spain bailout, dealers said.

New York's main contract, West Texas Intermediate crude for delivery in July, tumbled to $86.53 a barrel, its lowest level since October 20.

In London, Brent North Sea crude for July slumped $1.60 to settle at $101.87 per barrel.

US data on first-quarter economic growth and the jobs market in May signaled that the economy continues to struggle to pick up speed, a sign that favored sellers in the oil market.

The government's weekly US oil stockpiles report, for the period to May 25, added to that sentiment, with crude inventories significantly higher while gasoline consumption remained relatively weak.

Despite pump prices falling steadily since March, gasoline shipments for the past four weeks were down 2.6 percent from a year ago, the Department of Energy said.

"I don't know if the (inventory) figures were so bearish; it's more that the market is concerned over the global economy," Phil Flynn of Price Futures Group said of the overall New York market trend.

"The next level likely is $85," Flynn said adding that $80 might be possible for WTI crude.

The weakness of the euro, and the eurozone public debt troubles, kept a cloud over trade.

The euro dived to another 23-month low at $1.2364, making dollar-priced crude oil more costly for eurozone countries.

Meanwhile Iraq on Thursday announced it will hold a fifth energy auction after a landmark sale of energy exploration blocks closed with just three out of a potential 12 awarded.

The two-day sale, the first to invite international oil companies to explore Iraqi territory for energy deposits since the 2003 US-led invasion, concluded with eight blocks receiving no bids.