Brent oil dived a dollar to its lowest in a month on Thursday as sovereign debt mountains and economic pain threatened to dent fuel demand, while Japan's intervention to stem the rise in the yen boosted the US currency.

Brent was $1.20 a barrel lower at $112.03 by 1106 GMT, off a session low of $111.61, the weakest intraday price since early July. US crude was 92 cents weaker at $91.01.

Financial and commodities markets are likely to fixate on the economic picture as European and US central bankers deliberate and a series of data provides clues on the pace of any recovery.

"It's all about macroeconomics for the next five days basically," said Olivier Jakob of Petromatrix.

He said focus would fall on a European Central Bank rates decision, followed by US employment data on Thursday and Friday and a meeting of the US Federal Reserve next Tuesday.

For oil markets, macroeconomics dictate demand and even the most bullish of analysts are cutting consumption forecasts after debt problems on both sides of the Atlantic have underscored anxiety about the risk of a second leg down to the 2008 recession, a so-called double-dip recession.

Barclays Capital cut its prediction for global oil demand growth this year to 1.1 million barrels per day (bpd) this year, compared with its previous forecast of 1.56 million bpd.

Technical analysts, who forecast future price direction from chart movements, also said the market was very weak after the front-month contract dropped well below its 100-day moving average, a major support level.

Already, oil fell more than $3 on Wednesday after US inventory data showed a rise in stocks and a year-on-year decline in gasoline demand. That added to evidence that expensive fuel and a weak economy have reduced consumption in the world's biggest oil user.

Concerns about the US and European economies have driven investors into safer havens, which has sent gold to a series of records and boosted the Japanese and Swiss currencies.

Japan sold one trillion yen ($12.6 billion) and its central bank eased monetary policy on Thursday, a day after Switzerland announced a surprise cut in interest rates in an effort to tame currencies driven by safe-haven demand.

In response, the dollar has firmed against a basket of currencies although analysts have said the impact could be short-lived.      Theoretically, a weak dollar spurs buying in dollar-denominated commodities, which become cheaper for non-dollar investors.

The weakness of the US economy and its implications for commodity demand could, however, be a bigger factor for oil markets than any further decline in the dollar.

Should the dollar maintain its current rally, though, that would be a further bearish factor for traders already factoring in subdued consumption. – Reuters