Oil prices hit their lowest level since June 2012 on Thursday, with benchmark Brent prices dropping below $92 a barrel, as price cuts from top producer Saudi Arabia added to supply glut worries and weak global economic data.

Oil declined together with European stocks ahead of a European Central Bank meeting on Thursday, as investors waited to see if Bank chief Mario Draghi's asset purchase plan can inject confidence into the euro zone economy.

Sharp cuts in official selling prices from state producer Saudi Aramco to Asian customers on Wednesday came as the clearest sign yet that the world's largest exporter is trying to compete for crude market share, amplified supply concerns.

"This is a structural change in the oil market, with Saudi Arabia explicitly stating that they are willing to compete on price," said Bjarne Schieldrop, chief commodities analyst at SEB in Oslo.

"I think Brent will fall below $88 before we see the bottom of the market."

Brent oil for November delivery lost $2.43 at $91.73 a barrel by 0947 GMT. US November crude lost $2.33 to reach $88.40 per barrel, a fresh low from June 2012.

"Saudi Arabia has once again noticeably lowered the price differentials for its oil. In some cases, this puts them at their December 2008 levels, that is to say the level they were at during the 2008/09 economic crisis," said Carsten Firtsch at Commerzbank.

"Opec appears to be gearing up for a price war. We therefore do not expect prices to stabilize until this impression disappears and Opec returns to coordinated production cuts," he added.

With oil prices continuing to slide, the pressure is building on the Organization of the Petroleum Exporting Countries (Opec) to reduce output at its meeting next month.

While some analysts expect Opec to adjust the group's output target of 30 million barrels per day (bpd) for 2015, any cut may not be big enough to spur a bounce in oil prices.

SEB's Schieldrop said Opec would need to cut around 1-1.5 million barrels a day in production in order to balance the markets in 2015.

Oil production in Russia increased by almost 0.9 per cent month-on-month in September to 10.61 million barrels per day (bpd), Energy Ministry data showed.

Data on Wednesday showed disappointing European factory data, and China's manufacturing sector in September remained subdued. US economic strength, a rare bright spot for global markets, showed signs of caution following worries of an Ebola outbreak. – Reuters