Crude oil futures were weaker, below $100 early Thursday, as worries over the European debt crisis obscured gains spurred by a larger-than-expected drop in new claims for U.S. jobless benefits.

The Labor Department said new claims in the week ended Dec. 3 fell by 23,000 and were at the lowest level in nine months. Economists had expected a 7,000 decline in the week.

All eyes are on Brussels , where European leaders begin a two-day summit meeting, seeking a solution to sovereign debt crisis. The market has been gripped by concerns in recent months that the crisis in Europe could trigger a global economic slowdown.

The European Central Bank, as expected, lowered its key lending rate Thursday by 0.25 percentage point to a historical low amid growing worries of a recession. But equities and oil prices retreated after ECB President Mario Draghi appeared to pour cold water on investor hopes for more bond purchases.

"The situation in Europe swings between optimism and pessimism every single day," said Tom Bentz, director at BNP Paribas Prime Brokerage in New York . "Lately, the market has built in a lot of optimism and I'm afraid of a let down."

Light, sweet crude oil for January delivery on the New York Mercantile Exchange was 72 cents lower at $99.77 a barrel. The contract traded to a high of $101.73, lifted by the jobless news. ICE North Sea Brent crude oil for January was 77 cents lower at $108.76 a barrel.

"There is a need for Europe to come out with a firm statement and say we are banding together to tackle this," said Carl Larry, president of Oil Outlooks and Opinions, an energy advisory group.

Larry said Brent crude, widely used in Europe , is vulnerable to big declines if Europe can't address the crisis.

The price swings come against an increasingly bearish fundamental outlook in the U.S. , where inventories of crude oil, gasoline and distillate (diesel/heating oil) rose in the past week.

Nymex heating oil for January delivery was 0.42 cent lower at $2.9782 a gallon. Reformulated gasoline blendstock futures were 1.39 cents lower at $2.573 a gallon.

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