Light, sweet crude for September delivery lost 61 cents to $70.98 a barrel in trading on the New York Mercantile Exchange. The contract fell 56 cents to settle at $71.59 a barrel Thursday.

Reports Thursday suggesting a sluggish economy and news of spreading problems in the U.S. subprime mortgage sector contributed to the decline. The U.S. Labor Department reported the number of people signing up for jobless benefits grew last week, while many retailers reported disappointing July sales.

Also, French bank BNP Paribas froze three securities funds, saying they no longer know what they are worth because of problems in the U.S. subprime market. Moves by the European Central Bank and Federal Reserve to provide more cash to money markets were taken by investors as further evidence of credit market troubles.

"There are all these concerns about the credit market caused by the U.S. subprime mortgage market and the drop in particular was caused by BNP suspending operations of a few funds," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.